Oil Companies Testify Before the Senate
Earlier today, the heads of the five largest oil companies in America testified before a Senate committee. President Obama and many on the left have called for an “end to oil subsidies.” With gas prices at near record highs, they figure now is the perfect time to raise taxes on a necessary consumer commodity.
ExxonMobil CEO Rex Tillerson called the move to eliminate certain tax deductions and deferrals “discriminatory” and “counterproductive.” Democrats claim that because the oil companies are reporting record profits, they don’t need those incentives.
However, taking away those tax deductions and deferrals – some of which apply to all businesses, not just oil companies – is a targeted tax hike which unfairly singles out one industry or group of companies, such as the five big oil companies. These tax hikes wouldn’t apply to the smaller, independent oil companies.
Tillerson notes that oil and gas companies are already forced to deduct less using a section 199 tax deduction than all other companies allowed to use that incentive. Oil and gas companies can only deduct 6%, while other companies can deduct 9%. James Mulva of ConocoPhillips stated:
“We already have the highest effective tax rate among companies in the United States, and these proposals unfairly single us out for additional taxes.”
Why is our government trying to punish these companies for being successful? It is important to remember we live in a global market place, meaning oil companies do not set the price of oil; global supply and demand does.
On Tuesday, Sen. Robert Menendez (D-NJ) admitted that legislation aimed at curbing tax incentives won’t do anything about gas prices.
So why spend time and money on these proceedings? This is clearly just more of government favoritism. The President and his allies on the left want to raise taxes on the largest oil companies and give that windfall to their preferred alternative energy sources – even though it won’t lower gas prices one penny. If they tried this with any other industry (say, taxing baked beans to subsidize arugula farmers), there would be a much larger uproar.