WASHINGTON -- A fiscal watchdog group Tuesday accused the American Petroleum Institute and others of exaggerating the payments made by the oil and gas industry to the federal government. Earlier in the week, Jack Gerard, president of API, said the industry contributes $85 million a day to the federal government in the form of taxes, royalties "and the list...
WASHINGTON -- A fiscal watchdog group Tuesday accused the American Petroleum Institute and others of exaggerating the payments made by the oil and gas industry to the federal government.
Earlier in the week, Jack Gerard, president of API, said the industry contributes $85 million a day to the federal government in the form of taxes, royalties "and the list goes on" as he argued against eliminating tax breaks for the oil and gas industry he represents
Stephen Ellis, vice-president of Taxpayers for Common Sense, said that is misleading.
"Yup, just like I contribute to the gas station every time I fill up my car," Ellis said. "A royalty -- which makes up the vast majority of that total -- is a payment made in exchange for a good. In this case it is oil and gas they are removing from federal lands owned by all of the taxpayers. A royalty is not a tax."
Gerard has been fighting proposals by congressional Democrats and the Obama administration to end some oil and gas tax breaks to help bring down the deficit.
During an interview Sunday on C-SPAN, Gerard said oil companies pay an effective tax rate of 41 percent, higher than most businesses. But Ellis said that includes royalties.
"A few other canards came out as well, that the oil and gas industry is just taking advantage of tax breaks available to all companies," Ellis said. "Sure, the Section 199 manufacturing tax break is available to all companies, but I don't think Microsoft and Mars have intangible drilling costs, or get to expense tertiary injectants (unless they use that to stuff pretzels in M&Ms."
But Ellis said that what made him most angry was Gerard's statement that ending tax breaks for oil companies would hurt many Americans, including members of pension funds who own most of the stock in oil and gas companies.
"A sort of 'what's good for ExxonMobil is good for America' message," Ellis said. "What a load. Yes, there are many shareholders in these companies who have been benefiting from higher stock prices and dividends. Of course, it's not clear what -- if any -- impact eliminating many of the companies tax breaks would have on stock prices, particularly in the long run.
"But besides that, we should continue to give them tax breaks to help out pension funds and individual investors. What a ludicrous economic model. Let's subsidize Intel because pension funds own their stock. It's ridiculous on its face."
Ellis offered this bottom line:
"We have been subsidizing these profitable companies for a century. It's time to end the subsidy gravy train across the energy sector. It was always a good idea, but especially now that we are facing enormous budget deficits and we are trying to simplify the tax code."