While Representative Rehberg was voting entirely for the sake of the press yesterday, Senators Tester and Baucus were working to do something to restore fairness to America’s tax system—voting to end massive tax breaks to the oil and gas industry. The measure was designed to encourage development of alternative energy and reduce the deficit:
The legislation, sponsored by Sen. Robert Menendez, D-N.J., would target more than $2 billion in annual tax subsidies to the so-called Big Five oil companies — BP, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell and ConocoPhillips.
Had the measure passed Congress, about half of the $24 billion in savings over 10 years would have been reinvested in tax breaks for biodiesel, wind, cellulosic ethanol and energy-efficiency programs.The other half would have been used to reduce the federal deficit.
Now Senate Republicans who killed the measure argue that these ending these tax breaks to oil companies would increase the price of gas at the pump. As is usually the case, though, they ignored the evidence. The Congressional Research Service says that’s simply not true:
For the purpose of economic analysis, the repeal of the Section 199 deduction is equivalent to an increase in the tax on corporate profit. It is widely accepted that a proportional change in taxes on profit affects neither the firm’s incremental costs or revenues, and therefore does not change its behavior with respect to output. Since output does not change, there is little reason to believe that the price of oil, or gasoline, consumers face will increase.
No one here argues with the idea that industry should be able to make a profit, but it’s hard to accept a system which allows massive, multinational oil companies to pay a much lower rate of taxes than small businesses pay. I think that the five big oil companies have probably reached a point at which they no longer need tax incentives to survive. I suspect they’ll survive with $125 billion in annual profits just fine.
But it was those corporations that Senate Republicans voted to defend yesterday. Not Main Street, not family-run businesses, but massive corporations who recorded $137 billion in profits last year. It’s little wonder that Republicans have received 88 per cent of oil and gas contributions this election cycle.
Does anyone have any doubt about how Representative Rehberg would have voted yesterday, given the $450,000 he has received from the oil and gas industry during his do-nothing career, including $141,000 in this cycle alone?