Symbolic Vote
Tax Breaks Cut for Big Oil
By Richard Martin, 2-29-08
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The bill to eliminate $18 billion in tax breaks for oil and gas producers passed by the U.S. House this week is largely symbolic, since the measure faces opposition in the Senate and a likely president veto. But as symbolic gestures go, it’s a fairly powerful one.
Passed by 236-182, with 17 Republicans voting in favors, would use the savings from rollback of tax break for big oil companies to finance incentives for renewable energy, including wind and solar power. Several existing tax credits for renewable-energy investments will expire at the end of this year, unless Congress extends them.
Democratic representatives noted that the country’s five largest oil companies earned $123 billion last year, meaning “that rescinded tax breaks would amount to less than 2 percent of their profits,” reports Steven Mufson of The Washington Post.
The vote on the bill came a day after crude oil hit $102 a barrel, with many analysts predicting $4-per-gallon gasonline at the pump this summer.
It’s time to “stop the madness of subsidizing oil companies,” said Rep. Jim McDermott, a Democrat from Washington.
In other energy news:
-- The empty windswept plains that surround Denver International Airport “could soon become decorated with a dizzying array of mirrors reflecting sunlight,” The Rocky Mountain News reports. A company called SolarTAC, spun off from the Colorado Renewable Renewable Energy Collaboratory, is looking at establishing a solar-energy research center near DIA. The Collaboratory is a joint project of several institutions including CU, Colorado State, the Colorado School of Mines and the National Renewable Energy Laboratory.
-- In the face of utility opposition, the Colorado House of Representatives narrowly passed a bill to induce municipal power companies and rural electric cooperatives to spend more money on energy efficiency programs. HB1107 “would force REAs and city-owned power companies that serve more than 5,000 customers to spend 1 percent of their sales revenue in 2009 on programs that reduce their need to purchase or generate more power, upping that requirement to 2 percent by 2010,” the Pueblo Chieftain reports.
-- By a single vote, Gov. Bill Ritter’s controversial slate of nominees to the the Colorado Oil and Gas Conservation Commission was confirmed by a Senate committee on Tuesday, overcoming opposition from influential Republican lawmakers – and the oil and gas industry. Under Ritter’s direction, the legislature last year expanded the commission to nine members from seven, requiring that some members come fromoutside theindustry. The full state Senate will vote on the new commission in the next couple of months.
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Comments
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When the federal statutory corporate income tax rate of 35 percent is added to the weighted average of state corporate income taxes, the resulting rate of 39.3 percent means that corporations in the United States are currently at an international competitive disadvantage. In fact, as recent research has indicated, the top combined state and federal statutory corporate income tax in the U.S. is higher than any other country in the OECD.
Furthermore, the average effective tax rate on the major integrated oil and gas industry is estimated to equal 38.3 percent. This exceeds the estimated average effective tax rate of 32.3 percent for the market as a whole.
The magnitude of these tax payments made by US corporations raises the question of tax incidence. In other words, who bears the burden of taxes on the domestic oil industry? Every dollar a corporation spends, whether on taxes or anything else, eventually comes out of the pockets of individuals, specifically three groups of individuals: the corporation’s shareholders, in the form of decreased capital gains and dividends; its workers, in the form of lower wages; or its customers, in the form of higher prices.
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Sometimes the enemies are us as Pogo stated. Also, the other day the Texas power gird took a hit when the wind failed to blow. Which of the politicos will be willing to go home and campaign on a platform of raising energy prices to consumers?
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...the bill does a favor for Venezuelan dictator Hugo Chavez by exempting his state-owned oil giant CITGO – just as he is threatening to cut off Venezuelan energy supplies to the United States.
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If true, why would the Dems do this?
Click on Issue Analysis.