Turn Off the Oil Subsidy Spigot


Three weeks ago, the Senate rejected a proposal to eliminate about $35 billion in tax subsidies to oil companies as millions of gallons of oil spewed into the Gulf of Mexico. Sen. Bernie Sanders (I-VT) proposed using these funds to reduce the deficit and fund state energy efficiency programs. The Sanders plan to close these loopholes lost by a vote of 35-61, with every Republican voting against it.

The vote to preserve outdated subsidies that make rich oil companies richer while creating little benefit to the taxpayers who foot the bill was a victory for the oil industry and its lobbyists. They hailed the “vote to preserve a domestic manufacturing industry that is critical to our nation’s energy security and to the nascent economic recovery,” in the words of Charles T. Drevna, president of the National Petrochemical and Refiners Association.

See how your Senator voted


The “subsidies”, as I understand it, consist in tax incentives and some research funding, not some direct subsidy like the “green energy” people get.

But people would be mistaken in supposing the oil companies will “pay new taxes” because of this government’s political posturing. The consumers will pay it, as consumers always pay for corporate taxes. We’ll all pay more for gasoline, home heating oil, and everything that’s made of plastic or that is transported from one place to another. Even our food costs are greatly affected by petroleum prices.

So people should not be fooled by any of this. This government simply wants to tax you more without admitting that it’s doing it. Those who voted for this measure should NOT get the vote of anybody who does not want to pay more taxes.

Ridgerunner, The logical conclusion of your argument is that we should simply have no corporate taxes. And that is, clearly, ridiculous.

It is not clear that it would be the consumer that ended up paying in this scenario. And if prices did go up some then so be it. The net effect of the amendment is clearly positive and necessary.

Without political grandstanding, how could one possibly oppose this?

While we are at it, how about eliminating the multitude of other subsidies?

Oh wait, oil is the red-headed stepchild that everyone loves to bash right now.

I don’t purport to be a tax expert, and I haven’t reviewed sources that would tell me what tax deductions oil companies get and why they get them. Possibly they make sense. Possibly they don’t.

But there’s no question that those companies will pass additional tax costs on to the consumer. Some people who are generally against the use of fossil fuels would welcome that or any other measure that would make energy costs go up. But I doubt most people would welcome making their home heating, electricity, food, and all other consumer costs go up just so the government would have more money to spend.

There are those who do argue that we should have no corporate taxes, or at least that they should be lowered to match those of most industrialized countries. Our corporate taxes are, if I’m not greatly mistaken, the second highest in the world, and some say that gives us a trade disadvantage and also encourages shipping jobs overseas. But whatever the merits of that argument might be, corporations are not “taxpayers”, they’re “tax collectors”. There is probably a balance, short of abolishing corporate taxes altogether, that would make the country more competitive in world trade and job retention. That balance, to be successful, would probably also entail reduction of government spending. But that’s pretty unlikely at present.

It just shows the hypocrisy of the big business types. Out of one side of their mouths they want everything opened up to private business and let the marketplace determine who prospers or fails. But out of the other side (the one controlled by the lobbyists) they say we should support our domestic oil producers with taxpayer dollars despite the fact that they are making record profits.

Politics has become so laden with lies on both sides of the aisle. It will be this country’s downfall unless we start sending new people to congress at EVERY election. Let’s return to the view that political office is a service to the country, not a career.

I can’t find the quote now, but a couple of weeks ago on NPR, John Kerry was quoted as saying most Americans won’t mind paying a little more for their energy bills to for the sake of green energy. I almost fell out of my chair.

He doesn’t actually get out and talk to the little people very often does he? :shrug:

I would like to see us do away with a lot of these taxes and go with a flat tax or fair tax. All these taxes do nothing but drain American families and American businesses of their hard earned money. The more money we have to pay the government the less money we have to spend on the necessities.

I listened to the interview and absolutely agreed with the Senator.

I can’t see the extra 4 cents a litre of gas of carbon tax we are now paying in BC doing anything other than making the green czars such as John Kerry and their motley crew of avaricious politicians of the world filthy rich.

Not exactly.


Between 2000 and 2005, U.S. corporate taxes amounted to 2.2% of the GDP. The average for the 30 mostly rich member countries of the Organization for Economic Cooperation and Development was 3.4%.

Why the disparity given the high federal rate, which rises to 39% counting state taxes? Part of the answer is that big U.S. companies have become expert at hiding profits in tax havens overseas. And many of the smaller ones simply pass through their income to owners who then report it on their personal returns.

According to one analysis, if so much corporate income hadn’t moved to the personal tax rolls over the last 20 years, U.S. corporate taxes would account for 3.2% of the GDP, still a bit below the OECD average. “Usage of pass-through forms of business organization can be viewed as a form of ‘self-help’ corporate tax integration,” writes Peter R. Merrill, a partner at PricewaterhouseCoopers.

Read more: High Corporate Tax Rate Is Misleading - Investing - Economy - SmartMoney.com smartmoney.com/investing/economy/high-corporate-tax-rate-is-misleading-22463/#ixzz0tZoP3UJr

Eh? I don’t know a single conservative in real life that thinks a single dollar should go to corporate welfare (at least not in direct subsidies). The government should not be in the business of choosing winners and losers in the business arena.

Despite the fact that they are making record profits? You are aware, of course, that the oil companies’ profit margins are nowhere near the top.


Drug manufacturers, cigarettes, software, internet service providers, and a host of other industries have a higher profit margin than oil companies.

But then again, we also don’t think a single dollar should go to any subsidies. The government should not be in the business of propping up any industry.

So? The point was the rate, not the percentage of GDP. And this article uses undefined terms like:

“The average for the 30 mostly rich member countries of the Organization for Economic Cooperation and Development was 3.4%.”

Which countries? It doesn’t say. “Mostly rich”? What does this mean? And since these “mostly rich” countries have GDP’s that are probably significantly smaller than that in the US doesn’t mean they are shouldering a heavier burden.

How about some actual charts, such as from here:


Here is another report.

And let’s look at the GDP of those who have a higher tax in terms of percentage of GDP:

Luxembourg: 8% of GDP, Total GDP $53.7 billion, Taxes $4.2 billion
Norway: 8.6% of GDP, Total GDP $451 billion, Taxes $38.8 billion
Australia: 5.3% of GDP, Total GDP $1.02 trillion, Taxes $54.1 billion

The US?

US: 2% of GDP, Total GDP $14.59 trillion, $291 billion

Now, who do you think is really paying the most?

Finally, what does it matter what other countries are doing? If all of Europe when the way of Greece, should we follow? We do what is right to keep the US competitive, not to play follow our “enlightened” brothers in Europe.

This is a red herring. The marginal tax rate at which corporate profits are being taxed is 35%. Dividends are double taxed - first to the corporation (dividends are not deductible from income, as they are considered a distribution of wealth), and then taxed on the individual who receives the Dividend. Add in the fact that selling stock results in additional capital gain tax.


Australia: 30%, however some specialized entities are taxed at lower rates

Canada: Federal 11% or 18% plus provincial 1% to 16%. Note: the rates are additive.

Hong Kong: 16.5%

Ireland: 12.5% on trading (business) income, and 25% on nontrading income

New Zealand: 30%

Singapore: 17% from 2010, however a partial exemption scheme may apply to new companies

United Kingdom: 21% to 28% for 2008–2010

United States: Federal 15% to 35%. States: 0% to 10%, deductible in computing

Part of the answer is that big U.S. companies have become expert at hiding profits in tax havens overseas.

And there you have it. Increasing taxes only hurts our economy. If the taxes were lower, that money would be invested in the US and in US banks.

According to one analysis, if so much corporate income hadn’t moved to the personal tax rolls over the last 20 years, U.S. corporate taxes would account for 3.2% of the GDP, still a bit below the OECD average. “Usage of pass-through forms of business organization can be viewed as a form of ‘self-help’ corporate tax integration,” writes Peter R. Merrill, a partner at PricewaterhouseCoopers.

But the individuals are then paying taxes on that money. So again, raising corporate taxes mean less wealth.

Kind of switched things by citing the percentage of GNP there instead of income, old buddy.

Looking at Suudy’s chart, it appears the U.S. has the third highest corporate taxes in the world as a percentage of corporate income.

It really does amaze me, though, how the left is so willing to charge taxpayers for energy sources that don’t work, then make them pay more for energy sources that do. Either way, the government gets more money from taxpayers to hand out to its favorite patrons and projects. And then, the left claims to want to protect the consumer.

It’s not clear? Where do you think the oil companies get the money they use to pay taxes? (hint: they don’t print it)

Anyway, as Ridgerunner noted, this is not a direct subsidy. Are you in favor of cutting off all government subsidies and tax breaks to green energy producers? That would be fair and consistent. Why should the taxpayer have to pay for a corporations R&D work?

Let’s face it. This government is so addicted to wild spending for its “social re-engineering” projects and its repayments to its supporters, that it’s desperate for money. It doesn’t care how it gets it. It knows full well that the average American is going to pay for it, one way or another, but doesn’t care. But it does have to disguise its looting of taxpayers and consumers by declaring class warfare and claiming it’s going to “go after the rich”; something it will truly never really do, because so many of the truly wealthy pay this government to play.

Well goodie for you. Everytime you buy a gallon send an extra $1 to the charity of your choice, or make donations to Washington.
By the way, you’ll get your chance with Cap and Trade. Estimates range around 70 cents per gallon higher cost. Oh, but don’t expect that to make alternative energy available.

I thought the idea was to become less dependent on foreign oil. But if the administration makes things difficult for domestic oil companies, foreign oil companies will be glad to pick up the slack.

So, you will be voting out any congressman or senator up for re-election in your state that supported keeping the oil subsidies, Correct?

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