Group says gas, oil industry receives $104 million in yearly subsidies

Posted by Michael Swickard on Wednesday, July 27, 2011
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From the Alamogordo Daily News - By Milan Simonich, Texas-New Mexico Newspapers - New Mexico taxpayers contribute $104 million a year for corporations that are among the wealthiest in the country, according to the study, "Subsidy Gusher," by Taxpayers for Common Sense. Jill Lancelot, cofounder of the organization, said one purpose of the study is to pressure Congress to eliminate handouts for oil and gas companies. She said the industry turned a profit of $32 billion for the first quarter of this year for the top five oil and gas companies, but received public handouts even as America's crushing debt grew. In Texas, the industry directly employs 297,000 people and pays taxes of $7 billion to the state and local governments. Perhaps more significant in the context of the study, the tax rate on oil and gas companies is five times per job higher than any other industry in Texas, the spokeswoman said. This is because oil and gas bears a production tax not charged on other industries. New Mexico Oil & Gas Association calculated that oil and gas payments in taxes, royalties and other revenues totaled nearly $1.7 billion. The New Mexico state government's total budget for this year is about $5.4 billion. Lancelot said the nation's debt of $14 trillion and a record U.S. deficit of $1.6 trillion were all the more reason to eliminate the subsidies. "This industry should pay the cost of doing business," she said. "It is simply wrong to have wealthy corporations rake in more than $30 billion in just three months and not be willing to pay their fair share." Read more
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1 comments:

Paul Lindsey said...

"Oh what a tangled web we weave,
When first we practise to deceive!"
Sir Walter Scott

The problem is, I agree with a couple of things in this report, even though it is a regurgitated version of this one http://taxpayer.net/user_uploads/file/Energy/OilandGas/2011/Oil_and_Gas_Report_05-17-2011.pdf, with the words "New Mexico" crudely inserted on the cover, and Appendix 1 added. (Amazingly, the original doesn't have App 1, almost as though it was intended to be re-released on a state-by-state basis for PR purposes. Ya think?)

Definitely, the corn ethanol tax credits have to go. That's 40% right off the top. I would take away the depletion allowance (and similar mineral extraction allowances). The Passive Loss Exemption needs to go. I don't understand enough about LIFO (which is a change being proposed for all businesses, not just O&G), but I suspect that major corporations would simply have their accounting firms recalculate previous years' taxes to take the best advantage, nullifying some of the gains. Small and one-person companies would have to eat the loss, because they don't have the cash available to pay the CPAs.

Most of the other stuff I consider to be perfectly reasonable business expenses. If a company drills a hole in the ground looking for O&G, they should be able to deduct the expenses. Some people say that the costs should be spread over the life of the well. I say, how do you forecast that? What if what is found is not economical to pump out right now, but 10 years from now, some new technology comes along that makes it feasible? The only way to treat drilling expenses is to make them deductions in the year that they occur.

The problem with this report and the associated PR is that by lumping the ethanol tax credit ahnd LIFO in with the rest of the stuff, obviously to make the numbers look huge in order to make headlines and grab people's attention, TCS just pisses off people like me.

July 28, 2011 at 4:49 PM

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