Rep. Katie Porter (D-Calif.) does her homework, as an oil industry executive found out this week when he tried to insist that Big Oil doesn’t receive special tax breaks.
For decades, American taxpayers have been subsidizing an outdated and obscenely wealthy industry that pollutes our air, water, and land without any consideration whatsoever for the environment and public health. For instance, the oil industry has known about climate change since the 1970s and that fossil fuels are a big cause of it.
Oil and gas companies make hundreds of billions of dollars in profits every year, yet for some reason still get tax breaks that other businesses don’t get.
According to the Environmental and Energy Study Institute:
Conservative estimates put U.S. direct subsidies to the fossil fuel industry at roughly $20 billion per year; with 20 percent currently allocated to coal and 80 percent to natural gas and crude oil.
One of those direct subsidies is known as the Intangible Drilling Costs Deduction, which “allows companies to deduct a majority of the costs incurred from drilling new wells domestically” and is an active provision known as 26 U.S. Code § 263.
Again, this tax subsidy is real and oil companies still receive it to this day even though they don’t really need it. And that’s why Porter put Strata Production president Mark Murphy in his place after he insisted that his industry does not receive special tax breaks.
“We get to deduct all of those just like any other business,” he claimed. “There seems to be a misconception out there that you’re operating from that somehow the oil and gas industry benefits from some special sort of tax structure. We don’t.”
Again, the Intangible Drilling Costs Deduction is a special tax break. American taxpayers are funding these new oil and gas wells, which means oil companies get a free ride despite being easily able to afford to pay for the drilling themselves without resorting to using and abusing taxpayer money to do it. Meanwhile, every single Republican voted against Americans getting $1,400 of their own tax dollars during a time of crisis.
Porter was having none of it.
“You do benefit from special rules,” she said. “There’s a special tax rule for intangible drilling costs that does not apply to other kinds of expenses that businesses have. You get to deduct 70% of your costs immediately, and other businesses have to amortize their expenses over their entire profit stream. So please don’t patronize me by telling me that the oil and gas industry doesn’t have any special tax provisions. Because if you would like that to be the rule, I would be happy to have Congress deliver.”
Here’s the video via Twitter:
A Big Oil exec told me I had a “misconception” about a special tax break polluters get that other businesses don’t.
So, after explaining the deduction to him, I offered to write it out of the tax code if that what he wants. Just let me know! pic.twitter.com/ML25PMnrg5
— Rep. Katie Porter (@RepKatiePorter) March 9, 2021
We could save $13 billion or more over the next ten years alone if this one tax break were repealed. Frankly, every tax break for the oil and gas industry should be repealed. There are cleaner and more efficient energy sources such as solar and wind that Americans would actually benefit from while not destroying the environment in the process. Subsidizing the clean energy of the future is a better strategy than subsidizing the dirty energy of the past.
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