End tax subsidies to oil companies

Republicans hate government spending, but they still love subsidies to their favorite constituents.  So instead of choosing sides, we get this weird, inefficient dynamic where our tax code is used to mask government spending.

The Center for American Progress has been pointing out this problem for awhile, and Sima Gandhi has a great article detailing how the tax code subsidizes Big Oil.    Here is why politicians love spending money they don’t receive:

The basic problem with tax expenditures is that they are often not thought of as a form of spending, which makes for a dangerous double standard. When considering spending policymakers ask themselves, “Is offering hard-earned taxpayer dollars as a subsidy to a private, profit-making company a good idea?” But if the spending is cast as a tax expenditure the assessment is different. Even though tax expenditures come at a cost to taxpayers— as with any other type of spending—they are viewed through a different, less critical lens. Viewing tax expenditures through the same lens as other government expenditures provides a clearer image of both how they support public policy and use public resources.

In other words, tax expenditures too arcane for most people to recognize them as government spending.  Just a homeowner in any exurb if they support subsidies and if the government is supporting them and see what they say.  As for the oil industry itself,

But what’s more interesting about this story is Exxon’s effective income tax rate. Exxon has over the past couple years paid a U.S. federal income tax that is about 10 percent lower than its non-U.S. effective tax rate. Other oil companies also pay less, and in some years this difference has approached 50 percentage points.*

Oil companies pay less in U.S. taxes in part because they receive generous tax subsidies. These subsidies will cost the U.S. government about $3 billion next year in lost revenue and nearly $20 billion over the next five years.

These subsidies are a drop in the bucket compared to an oil giant’s annual revenue, but you won’t find any executive who is going to turn down free money, even (or especially) government money.

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• Martin Lobel: Newsflash: Tax Cuts Are Expenditures That Increase the Deficit (huffingtonpost.com)
• A Subsidy By Any Other Name (theatlantic.com)