Tax Analysts Blog

The Great Myth About Oil Tax Breaks

Posted on Feb 8, 2011

President Obama and liberal Democrats are gunning to raise oil company taxes to reduce the deficit and to pay for tax breaks for green energy. They are tapping into the public's natural hostility to the companies' that Americans pay $50 every time they fill up their gas tank.

Oil companies are big. They are powerful. They hire armies of lobbyists. They make truckloads of campaign contributions, They hire hundreds of lawyers to fight lawsuits and circumvent regulations. And they pollute like there is no tomorrow. But one thing they do not do is shirk their responsibility to pay taxes, as this table shows.

Since the Gulf oil spill, hardly a week has passed when a journalist has not called and asked for background on all the tax breaks enjoyed by the oil industry. They are invariably surprised and miffed with my response: oil companies pay high taxes. They pay high foreign taxes in the countries where they extract oil. And long gone are the days when depletion allowances got them low domestic taxes.

The biggest tax break enjoyed by the oil industry is something called the section 199 domestic manufacturing/production deduction. This became law in 2004. All companies that produce things in the United States are eligible for it.

Editor's Note: You can read a brief article responding to this post by Robert S. McIntyre and Steve Wamhoff of Citizens for Tax Justice here.

Read Comments (2)

v perryAug 15, 2012

The tax rates are much too complicated for a 30 second discussion on the
internet. Read the Forbes artilce on oil company tax rates- and their
explanation of offsetting losses elsewhere. Ignorant leftist should not believe
everything Media Mutters prings

v perryAug 15, 2012

Many of the leftist's here continue to berate the oil companies for using
legitimate tax steps clearly authorized by Federal Tax Law.

Don't like the results? Lobby congress.

The Liberal Dems were in power for many years and never junked these tax laws-
ask yourself why?

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