Legislation Would End $4 Billion in Tax Giveaways to Big Oil, Use Savings to Reduce Federal Deficit
Ohio Senator Sherrod Brown outlined a bill Monday aimed at ending the more than $4 billion in tax deductions, subsidies, and royalty relief to big oil companies each year.
Brown announced his plan Monday at a gas station in Cleveland. It would end $4 billion annually in tax breaks, subsidies and royalty waivers for the five largest oil companies, his office said. "It's bad enough that Ohioans have to pay more than $4.00 a gallon at the gas pump because the price of crude oil rises due to price fixing by OPEC," Brown said in a statement.
"They shouldn't need to subsidize the oil industry through the tax code as well. Big Oil is reaping big profits while working- and middle-class Ohioans struggle to make ends meet," he said.
The bill targets the companies' ability to claim a lucrative deduction based on manufacturing and production income and quickly write-off certain drilling costs, among other provisions.
Over the last decade, the nation's five largest oil companies have taken home nearly $1 trillion in profits--including more than $30 billion in the first quarter of 2011 alone--and tens of billions of dollars in taxpayer subsidies. Oil companies make up four of the top ten spots on the Fortune 100 list of largest corporations.
CEOs from the Big 5 oil companies have testified that they do not need incentives for oil exploration. Meanwhile, gas prices in Ohio have spiked to near-record highs, putting a squeeze on family budgets and small business owners, and placing Ohio's economic recovery at risk.
The Close Big Oil Tax Loopholes Act is aimed at ending the more than $4 billion in tax deductions, subsidies, and royalty relief to the five biggest oil companies each year. The new bill would end these wasteful taxpayer handouts to big oil companies making record profits and use the savings to reduce the federal deficit. Closing these loopholes will amount to more than $20 billion over ten years for taxpayers.
Among its provisions, the legislation would accomplish the following:
- Recoup royalties that oil companies avoided paying for oil and gas production on public lands
- Prevent oil companies from manipulating the rules on foreign taxes to avoid paying full corporate taxes in the U.S.
- End a number of tax deductions and relief afforded to the oil industry, such as the deductions for classifying oil production as manufacturing, for the depletion of oil and gas through drilling and for costs associated with preparing to drill.
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