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Home Publications Blogs Beat the Press The Big Debate Over Big Oil's Tax Breaks

The Big Debate Over Big Oil's Tax Breaks

Monday, 09 May 2011 04:14

The NYT reported on the effort by congressional Democrats to take back $20 billion in tax breaks for the oil industry over the next decade. The article tells readers that this is an effort to reduce the budget deficit. It would have been helpful to point out that this amount comes to less than 0.3 percent of the deficit projected over this period.

These tax breaks are arguably an unwarranted subsidy to hugely profitable oil companies, however it is not plausible that they will have a notable effect on the deficit over the next decade. This fact should have been pointed out to readers, just as reporters should point out that Republican efforts to increase drilling cannot plausibly be expected to have a noticeable impact on gas prices.

Comments (3)Add Comment
Retired English Professor
written by Horace S Rockwood III, May 09, 2011 8:34
Taking back the tax breaks to oil companies at a time when their profits are hugely high and most of the citizens are struggling would have a strong and popular symbolic value, even though the savings will be small. Plus, there's always the add-up factor: 20 billion here, twenty billion there, and pretty soon, you'll be talking real money.
Attacking "hugely profitible" oil companies is fun
written by Bill H, May 09, 2011 10:04
Oil companies make some 10% profit these days, up from 7% earlier, so we probably should punish them as heavily as we can. You certainly would be embarrased and feel guilty if you received 10% on your savings, wouldn't you?

But why is no one attacking hospital companies, which typically make 50% profit, drug companies making 35%, information technology companies making 45% or Microsoft making 80% profit? Why is there no outcry against the manufacturing sector for its average of 28% profit?

Just curious.
.3% in a single swipe seems like a lot to me
written by Melissa, May 09, 2011 8:40
Aside from slashing the defense budget (which the mil contractors have carefully protected by spreading so many jobs in so many congressional districts), the solution to the deficit will have to come in the addition of many fractions of percents saved all over the place. 0.3% for a single and for most Americans painless tax change seems pretty huge to me compared with the literally hundreds of 0.05% and 0.1% changes that are going to be needed to add up.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.