Thursday, March 6, 2008

Big Oil Should Pay Its Share of Taxes

Big Oil Should Pay Its Share of Taxes

By James K. Boyce

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On Feb. 28, the Gazette ran an AP story headlined "House OKs $18B in new taxes on big oil companies." Buried in paragraph 10, the careful reader learned that a bill passed the previous day by the U.S. House of Representatives seeks to "roll back two lucrative tax breaks for the five largest U.S. oil companies."

Excuse me? Since when is rolling back tax breaks the same thing as "new taxes"?

One of these tax breaks "helps manufacturers compete against foreign companies." Huh? Since when do oil companies "manufacture" anything besides super-profits?

The other "gives a tax credit related to oil and gas extraction outside the country." Outside the country? Whose brilliant idea was this?

It's time for some common sense on Big Oil. Here is the story in plain English: While American families pay their taxes, Big Oil pays lobbyists and lawmakers to give them tax breaks. These not only deprive our government of money to pay for everything from education and bridges to health care and veterans' benefits. They also deepen a root cause of our country's economic and foreign-policy woes: our abject dependence on oil, most of which doesn't happen to be buried under our soil.

Revoking the two tax breaks is projected to cost the five largest U.S. oil companies $1.8 billion per year over the next 10 years. To put this number in perspective, these companies hauled in $123 billion in profits last year. Common sense includes simple arithmetic: ending the tax breaks will trim Big Oil's profits by a mere 1.5 percent.

Even this is too much for Rep. Jim McCrery (R-La.). He fumes that the rollback would "punish" the oil industry, a move he decries as "wrongheaded" and "spiteful." Who is this guy? The ranking Republican on the House Ways and Means Committee, the committee that makes our tax laws.

The White House agrees with McCrery, saying the bill "unfairly takes aim at the oil industry." President Bush is expected to veto it - if the bill makes it through the Senate. Similar bills failed to clear the Senate twice last year.

It is time - past time - to talk common sense. The House bill does not levy "new taxes": it revokes two fat tax breaks. It's not "spiteful" for the American people to demand that Big Oil pays the going rate on its profits: we pay Big Oil's going rates every time we fill up at the pump.

The problem is not only that we are being ripped off at the pump, and then ripped off again when Big Oil recycles a fraction of its profits into buying tax breaks in Washington. These travesties are dwarfed by the biggest ripoff of all: the damage to our planet caused by burning oil and other fossil fuels. We pay the price of Big Oil's profiteering today, but our children and grandchildren will pay an even heavier price tomorrow.

Over the next decade, the House bill would redirect the $18 billion into support for wind power, solar energy, and energy conservation. Common sense tells us this would be one small but welcome step in the direction of fiscal and environmental sanity.

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