At a town hall meeting last weekend, constituents slammed Rep. Robert Dold (R-IL) for supporting the radical House Republican budget — particularly its failure to eliminate the costly tax breaks for oil companies that the government doles out every year. Dold attempted to sooth their grievances by arguing that his support for the oil subsidies is directly related to job growth:
Dold is correct that oil companies are included in the manufacturing deduction, a move theylobbied heavily for back in 2004. But this is by no means their only source of corporate welfare — there are many other loopholes oil companies have enjoyed for nearly a century.
For one, multinational oil companies also get the privilege of being “dual capacity taxpayers,” which means they can write off the bulk of their domestic tax bill because they already paid their “taxes” to the host country (even though many countries impose low or no business tax – meaning the “taxes” are really just required royalties paid for extracting natural resources). They are also able to “expense” certain drilling costs and write off the costs of searching for oil, even though those actions enable them to boost their profits. All told, the U.S. gives tax benefits to the tune of $4 billion every year to Big Oil.
And as it turns out, contrary to Dold’s pronouncement, these tax credits create very few jobs. Spending on wind, solar, and other forms of alternative energy, meanwhile, has proven to be a much better return on investment, with job creation two and a half to four times larger than that for oil and natural gas.
If you’re talking about the subsidy that is generally referred to as the ‘manufacturing subsidy’ – all American manufacturers – every single one out there – actually gets a three percent [tax] reduction in their income for making American products. The oil companies that you’re referring to are part of it. That’s usually the big subsidy that people are talking about, and so the question then becomes, do we want to take that away from American manufacturers?
Watch it (Question starts 15 seconds in):
For one, multinational oil companies also get the privilege of being “dual capacity taxpayers,” which means they can write off the bulk of their domestic tax bill because they already paid their “taxes” to the host country (even though many countries impose low or no business tax – meaning the “taxes” are really just required royalties paid for extracting natural resources). They are also able to “expense” certain drilling costs and write off the costs of searching for oil, even though those actions enable them to boost their profits. All told, the U.S. gives tax benefits to the tune of $4 billion every year to Big Oil.
And as it turns out, contrary to Dold’s pronouncement, these tax credits create very few jobs. Spending on wind, solar, and other forms of alternative energy, meanwhile, has proven to be a much better return on investment, with job creation two and a half to four times larger than that for oil and natural gas.
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