Senate Democrat -- Big oil doesn't need tax breaks
Ending U.S. oil breaks won't raise fuel cost
| Oil execs say they pay too much tax, yet most American workers pay more. If Americans stood up to oil companies, would the “oiligarchy” sock it to them and charge more for gasoline? We, trim, blend, and append two 2011 articles on May 12 from (1) Associated Press on sharing by Stephen Ohlemacher, and (2) Reuters on gas prices by Timothy Gardner and Tom Doggett. |
by Stephen Ohlemacher and by Timothy Gardner & Tom Doggett
- Senate Democrat -- Big oil doesn't need tax breaks
With the CEOs of the five largest oil companies sitting before the Senate Finance Committee, Sen. Ron Wyden of Oregon played a video of a 2005 congressional hearing in which oil company executives said they didn't need generous tax breaks because oil was selling at $55 a barrel. As the hearing commenced, the price per barrel hovered just below $100.
"You all said you didn't need them in 2005," Wyden said. "You seem to be telling a different story today."
In opposition, Sen. Orrin Hatch, R-Utah, referred to a large portrait of a dog sitting on a pony to illustrate his thoughts of the proceedings.
"For the president and some of my colleagues," Hatch said, "the answer is always raise taxes. Government spends too much? Raise some taxes. Health care too expensive? Raise some taxes. Gas prices too expensive? I've got it . . . Let's raise some taxes."
Democrats countered that allowing a hugely profitable industry to continue taking billions of dollars in tax breaks is as credible as the notion of a unicorn galloping into the hearing room. "The issue is who shares" the burden of economic recovery, said Chairman Max Baucus, D-Mont.
Sen. Robert Menendez, D-N.J., the author of a bill that would repeal the tax breaks for the companies, demanded an apology from ConocoPhillips CEO James Mulva for a press release from the company that said in the headline that the tax cut proposals were "un-American."
Mulva refused, saying that no personal offense was intended.
The hearing featured the CEOs of Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp., five companies that booked profits totaling $36 billion during the first quarter. The Democrats say that with profits that high, the big oil companies wouldn't miss tax breaks that average $2 billion a year.
Sen. Jay Rockefeller [of an oil family], D-W.Va, said oil companies are "deeply and profoundly committed to sharing nothing."
The nonpartisan Congressional Research Service concluded that eliminating the tax breaks would raise about $1.2 billion in 2012. By comparison, the five oil companies had combined revenues of $1.5 trillion, and profits of more than $76 billion, in 2010.
Republicans, who now control the House and have enough votes to block legislation in the Senate, oppose tax increases. They are joined on this issue by a handful of Democrats, mainly from oil-producing states.
To see the whole article, click here .
- Ending U.S. oil breaks won't raise fuel cost: Democrats
Repealing billions of dollars in tax breaks for Big Oil won't raise U.S. fuel prices, Senator Max Baucus said before the CEOs of some of the most powerful companies in the world, summoned to Capitol Hill to defend their surging profits.
Oil prices are set on a world market and the U.S. share of crude production is less than 10%.
"That makes it difficult -- if not impossible -- to pass on the cost of losing these subsidies, to consumers," Baucus, the head of the Senate Finance Committee, said.
The executives contend their corporations already pay high taxes and ending their incentives would only drive them to look for oil abroad, costing American jobs. That would eventually raise oil prices and fuel prices in turn, they argued.
Rex Tillerson, the chief executive of Exxon, said the company's tax rate from 2005 to 2010 averaged 32%.
The Center for American Progress, a liberal think tank, said in a analysis this week that Exxon's federal tax rate last year was 17.2% after all the tax breaks and concessions were accounted for, lower than what the average American pays.
Senate Majority Leader Harry Reid said he wants to bring a bill to the floor next week to repeal oil industry tax breaks. Repealing the tax breaks -- the call among Democrats in the Senate -- has grown louder as the oil price remains near $100 a barrel.
The bill's backers face a hurdle getting the 60 votes needed for passage in the 100-member Senate because of staunch opposition from Republicans and some Democrats from oil-producing states.
But getting Republicans to go on record as supporting Big Oil could be an arrow for Democrats to shoot in the election campaigns if prices keep rising.
To see the whole article, click here .
JJS: Besides closing loopholes, let’s treat oil executives the same way the IRS treats ordinary citizens:
* recover royalties they never paid and
* jail the CEOs who violated those contracts with the American people. Furthermore, let’s
* quit direct subsidies, such as free money to “research” shale oil and nuclear power, and
* quit indirect subsidies, such as paying too much to pump oil back into the ground as a “Strategic Reserve” and for fueling the military, which not coincidentally sepnds most of its efforts in oil-rich regions. At the same time,
* do not tax their profit for extracting, refining, and distributing oil. But do
* charge them for every penny of damage their operations cause. And most fundamentally, let’s
* recover the full annual “rental” value of oil in the ground, what a company pays for the exclusive right to suck out petroleum from a particular bed. Or, at least they pay Muslim governments; they’re able to broadly dodge this obligation in their home countries.
Note that the value of a natural resource in situ is not a value created by any oil company applying its labor or capital. It’s just the market value of oil -- something nobody made and everybody needs -- before it’s touched, set by global demand and global supply. It’s a value that belongs to everyone and some of which Alaska pays to residents as a dividend.
Note, too, that the amount of oil “rent” is not set by politicians and that government need not use taxes to recover it. Instead, government can use fairly competitive auctions to grant permits to the highest bidder. Using the word “tax’ to describe requiring extractors to pay society for the exclusive right to some oil is misleading; “oil dues” or “resource dues” or “land dues” would be much more precise.
Do all the above – essentially, make oil companies pay their way -- and alternative energy sources will take over major market share in just a matter of years. Then global warming and smog will become problems of the past. And no industry will be powerful enough to insult an elected official and refuse to apologize.
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Editor Jeffery J. Smith runs the Forum on Geonomics.
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Also see: Who gets compensated? Who gets deceived?
Why Pay the Privileged our Public Money?
Major paper fingers state favors for insiders |
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