Yesterday’s New York Times editorial “Big Oil’s Good Deal” should not go unanswered.
It falls far short of giving readers the real deal, providing an inaccurate and incomplete accounting of the oil and gas industry’s true tax burden. And if its proposals for punitive and discriminatory changes in tax policy were followed, it would mean a raw deal for America, jeopardizing job-creating investments and undermining U.S. competitiveness.
The U.S. oil and gas industry contributes more than $1 trillion a year to the American economy and supports more than 9 million American jobs, providing more than $550 billion in labor income. We also make an important contribution to federal and state treasuries. In just 2007 and 2008 alone, for example, the major industry producers incurred more than $180 billion in duties, fees, income and other taxes. Those are facts you won’t find in The Times’ editorial.
Neither will you find this one: The oil and gas industry routinely pays more taxes than it earns. ExxonMobil alone paid $22.8 billion more to federal, state and local governments in income and other taxes from 2004 to 2009 than it earned in the United States during the same period. Once again, these are facts you won’t find in The Times’ editorial.
Regarding the “special treatment” in tax policy the oil and gas industry allegedly receives, The Times gets it wrong here, too. According to the U.S. Energy Information Administration, the industry’s 2008 income tax expenses (as a share of net income before income taxes) averaged 53.2 percent, compared to the average of 32.2 percent for the S&P Industrial companies. That’s some special treatment.
But perhaps the most misleading claim is the one regarding industry tax deductions, including “the biggest of the deductions – 9 percent of qualified income from gas and oil produced in the United States.” In fact, this deduction applies to every taxpayer that produces, manufacturers, grows or extracts any property in the United States. Even the publisher of The New York Times qualifies for it. And, beginning this year, the oil and gas industry only qualifies for a 6 percent deduction. In other words, The Times enjoys a greater “tax break” in this area than the oil and gas industry. Funny how that’s not mentioned.
Bad facts can lead to bad policy – and The New York Times editorial proves the point. Its proposal to target one industry for tax punishment not only violates Americans’ basic sense of fairness, but also contradicts our own national interests.
Take proposals to rewrite the “dual capacity” rules for U.S. oil and gas companies with overseas operations, for example. These changes would virtually guarantee double taxation of income for American oil and gas companies, making it more difficult for us to compete against oil and gas companies based in China, Russia, and, yes, even the United Kingdom and France.
That’s hardly a good deal for “Big Oil” – but it’s surely a bad deal for the United States.