More Tax Breaks For The Oil Industry

  • Friday, 01 August 2014 00:00

As if the oil and gas industry needed another tax break. A new report by the Wall Street Journal today says that American oil and gas companies are paying less in federal income taxes as a result of the domestic energy boom.

By spending billions in hydraulic fracturing and horizontal drilling, the oil and gas industry are in turn "deferring billions of dollar in income tax," the report said, by taking advantage of incentives in the tax code for drilling and capital expenditure.

It said that as long as these companies continue to invest heavily, they would be able to defer taxes.

Even more shocking was the report's revelation that in the past five years, the 20 big publicly traded oil and gas producers in the US have paid $15.6 billion in income taxes but deferred an astounding $16.5 billion in taxes.

"Together, the 20 had an effective tax rate of 24% on their U.S. income, below the statutory 35% rate and well below the 46.2% those with overseas operations paid abroad" the report said, citing the nonpartisan Taxpayers for Common Sense.

It said one tax incentive for the oil and gas industry that has existed for a century allows companies to deduct "intangible drilling costs."

There are also other tax incentives that the industry receives which can be read here.

So the next time someone tells you that the ethanol industry is "subsidized," point them to these articles. It's bad enough that they've been profiting from high oil prices while consumers have suffered (the billions they spend on drilling has done nothing to reduce pump prices but enrich their pockets). But the fact that they've been defering billions in taxes is just outrageous, if not sickening.