The new report from the Taxpayers for Common Sense shows that oil companies paid just 11.7 percent of their U.S. income in federal taxes over the last five years, and the “smaller” companies included in the study that reported positive earnings only paid 3.7 percent. To achieve such a low tax rate, oil companies were able to take advantage of special tax breaks and loopholes that allowed them to defer more than $17 billion in taxes they would have otherwise owed.
The tax incentives for the biofuels industry is just shy of $7 billion per year, but the biofuels industry does conform to the statutory tax rate. Conservative think tank The Heritage Foundation crows that the petroleum industry receives no tax subsidies. But the fact is they receive 17 subsidies allowing them to defer taxes, and they are the richest industries on earth.
In 2010, 54 of the world’s wealthiest 500 companies were in the oil and gas industry. These 54 companies had a combined market value of $4.17 trillion and accounted for 15.9 percent of the wealth.
The report concludes that although the industry claims it pays a high federal income tax rate, with the American Petroleum Institute citing an industry-wide effective tax rate of 44.3 percent, “In reality, the amount oil and gas companies pay in federal income tax is considerably less than the statutory rate of 35 percent, thanks to the convoluted system of tax provisions allowing them to avoid and defer federal income taxes.”
The U.S. Congress has a host of expiring tax credits, including the wind production tax credit (PTC), and it whines about cost of these incentives. But somehow the the Republican leadership and oil-state Democrats treat the entire portfolio of oil tax benefits (translated as lost federal tax income) as a “tax increase.” According to Congressional Joint Economic Committee, these benefits (including the subsidized royalty agreements) add up to $80 billion in future tax subsidies. Journalist Todd Neeley concluded that oil subsidies total $133.2 billion to $280.8 billion annually.
We all know there is “energy fantasy” in Washington, D.C., which is partly due to the fact that fossil industries are huge political givers. According to PriceofOil.com:
- 2010 amount given to fossils in federal subsidies: $11,578,900,000
- Total amount given to fossils during 111th Congress: $20,489,340,000
A new report from the Sierra Club and Oil Change International found that the oil, natural gas and coal industries increased their political contributions by a jaw-dropping 11,761 percent from 2008 to 2012.
The Washington comedians say “we have the best Congress money can buy.” But frankly, it’s no joke.
Lead image: Oil barrels and money via Shutterstock