America’s oil companies rake in the largest corporate profits in the world. Last quarter (three-month period), for instance, ExxonMobile reported an after-tax profit of almost US$ 11 billion!!
These same companies have also been receiving massive tax breaks, some for a very long time, while others were passed during the GW Bush administration. Overall, the industry receives break totaling US$4 billion a year!!
Based upon their profits and the amount of tax they don’t pay, can anyone explain the logic and/or fairness in providing tax breaks to an oil company bringing in after-tax profits of perhaps US$40 billion or more a year??
Can anyone explain why republicans are pushing legislation in which seniors and the poor would bear the brunt of reduced funding for medicare, medicaid, food stamp programs, heat assistance, etc., while these oil companies make profits so high that they are larger than the entire national budgets of some small countries?
Perhaps the republicans in the US senate should be asked to explain it. Last week in the US senate they prevented a vote on eliminating these costly, wasteful and unnecessary oil company tax breaks from passing by a mere 8 votes. Some republicans, including senator Roy Blunt of Missouri, claimed that the oil companies would pass the increased expense onto consumers. But a report by the non-partisan Congressional Reseach Service (CRS) said just the opposite. Specifically, the report states that
“Oil companies get a 6 percent deduction in net income for domestic production. Ending this would be equivalent to an increase on the tax on corporate profit. It is widely accepted that a proportional change in taxes on profit affects neither the firm’s incremental costs or revenues, and therefore does not change its behavior with respect to output. Since output does not change, there is little reason to believe that the price of oil, or gasoline, consumers face will increase.”
It went on to explain that the price of oil is so high that there’s plenty of incentive for continuing to produce oil in the U.S. “With current oil prices at or near $100 per barrel in the United States, it is unlikely that firms will slow production, or close wells as the result of the loss of the Section 199 deduction.”
If the stated reason of preventing increased gas prices is false, than what’s the GOP’s REAL reason for opposing this legislation, besides the fact that oil companies contribute large sums of money to the republicans’ political campaigns? Republican dogma states that corporate America should be free to operate as it wishes; taxes are always bad; government is always wrong; and the poor are always easy victims. Apparently the GOP was absent (or comatose) when the 2008-2009 recession was playing on every street in America.
According to the Reuters/Ipsos poll conducted between May 5th and 9th, 2011, almost 52% of all Americans favor a balanced approach to deficit and debt reduction, i.e., both reduced spending and increased taxes. Thus, it would seem that the republican congressionals worried about keeping their jobs may have grossly miscalculated the political strategy required to win the next election.
And as lazy, ignorant and misinformed as many people in the USA are, sooner or later lots of them are going to ask why exactly they have to suffer the pain of reduced or eliminated safety net programs like medicaid and food stamps and heat assistance, while the mega-fortunes of the well-connected rich and powerful are unabatedly multiplying exponentially.
And while the oil companies last week complained that any relaxing of their tax breaks would be “unamerican”, they never missed an opportunity to raise the price of heating oil, gasoline, and all other oil-distillate products.
It really makes one wonder how deep greed can go in humans, and how people (or a political party) can embrace their own greed at the expense of universal quality of human life.
To that end, , HBO has produced and is airing a very important movie entitled “To Big To Fail“, which clearly describes the events that led to the 2008-2009 recession. Each of these events was fueled by individual and corporate greed that influenced the financial companies to take extremely risky actions.
In a snowball effect caused by these risky action and eased by financial deregulation, the USA drove dangerously close to a major financial meltdown that was only very narrowly avoided at the last moment. Had it occurred, it would have made the 1930’s Great Depression look like a walk in the park. Just-plain-greed was the root cause.
Anyone who either believes in a totally deregulated free market and corporate welfare such tax breaks for oil companies, or who just wants to understand the events and decisions that resulted in the worse financial crisis in the USA since the Great Depression, need to see this movie.
It will astound you, and maybe even scare you.