President Obama has made tax breaks for the oil industry an ongoing target. He recently reaffirmed his stance in his State of the Union address, saying that our nation has supported these companies for long enough. And as budget season begins next week, we’ll likely see the idea come up again in deliberations over where to cut.
But exactly how much companies like Shell and ExxonMobil receive is something of a mystery. Tucked into tomes of tax code, subsidies for fossil-fuel industries are often obscured. The IRS does not make public the amounts that companies save, and estimates range widely. One analysis found that about $72 billion went to oil, gas, and coal producers from 2002 to 2008. But we really don’t have a clear or complete picture of the actual total; it could easily be much higher.
Certainly the record profits posted by companies like Exxon suggest that their tax subsidies could be allocated more efficiently elsewhere. The first step in deciding on the appropriate level of tax breaks for these types of industries would be finding out what they’re getting right now. After nations agreed to lower their fossil-fuel subsidies at the Toronto G8 summit, the Organization for Economic Co-operation and Development (OECD) set to work cataloging these subsidies around the world. Their results can also help to fine-tune estimates on what our government is giving to oil and coal producers. But we still don’t have a complete picture.
In an effort to better account for what various energy sectors get from U.S. taxpayers, we at the Institute for Policy Integrity have launched a wiki. It will use crowdsourcing to catalog tax-code sections that provide tax relief to energy-producing companies, tapping the expertise of lawyers, economists, tax professionals, and concerned citizens.
Nowadays we may be inured to the sound of big-dollar figures: $400 billion in budget cuts, $700 billion stimulus, $14 trillion deficit. But make no mistake: tens of billions in taxpayer dollars each year going to a handful of industries that have been well established in this country for a century — that’s a lot of money. If we cut even a fraction of that, we could restore funding for important services or launch new job-creating infrastructure projects.
Before we delve into the federal budget looking for ways to save, shouldn’t we at least know how much we are sending to industries that don’t need our help?
- Should we get rid of all energy subsidies?
- Is it politically realistic to eliminate energy subsidies?
- Direct subsidies to fossil fuels are the tip of the (melting) iceberg