I was going to ask, “what tax breaks and subsidies do oil companies receive that other companies do not?”
From
this article,
Everyone wants to end subsidies to oil companies, from
President Obama to
John Boehner and
Paul Ryan. My question was “
What subsidies?” Remarkably enough,
CNN Money provided the answer.
It turns out that they are all tax “breaks.” I even hesitate to call them “breaks” because some of them amount to little more than Congress defining accounting terms such as “capital equipment.” And the total amount of earnings not collected in
taxeshttp://images.intellitxt.com/ast/adTypes/icon1.png (which liberals define as a “subsidy”) is about $4 billion per year. Here is how that breaks down.
Domestic manufacturing tax deduction – $1.7 B. This is a tax deduction given to every manufacturer in the US. Per CNN, it was “designed to keep factories in the United States.” If that deduction were eliminated for oil companies only, it would mean singling out oil companies from all other manufacturers.
Percentage depletion allowance – $1 B. Any industry can write down a portion of the cost of its capital equipment as part of the cost of doing
businesshttp://images.intellitxt.com/ast/adTypes/icon1.png. Right now, oil in the ground is treated as capital equipment. Again, this “subsidy” amounts to how the cost of doing business is defined. All companies get it, not just oil companies.
Foreign tax credit – $850 million. Companies get credit for taxes they pay to other countries. All companies get this “subsidy,” not just oil companies. Should a company pay tax on tax? Should
only oil companies pay tax on tax?
Intangible drilling costs – $780 million. According to CNN, “[a]ll industries get to write off the costs of doing business, but they must take it over the life of an investment. The oil industry gets to take the drilling credit in the first year.” Among these four tax “breaks,” this smallest one was the only one that treated oil companies differently.
Do you know what oil company
does get US subsidies, and not just tax “breaks”? Petrobras, Brazil’s state-owned oil company.