A July 4 New York Times article reported that “according to the most recent study by the Congressional Budget Office, released in 2005, capital investments such as oil-field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.”
“The American Petroleum Institute, an industry advocacy group, argues that even with subsidies, oil producers paid or incurred $280 billion in American income taxes from 2006 to 2008, and pay a higher percentage of their earnings in taxes than most other American corporations,” according to the Times.
Wouldn’t it be nice to know the truth? We know that oil companies are extremely profitable. the most profitable company in 2009 was Exxon Mobil with a profit of $45 billion, according to Fortune magazine. We also know, as mentioned in the Times, that “the oil and natural gas industry has spent $340 million on lobbyists since 2008.”
Having served in Congress, I can tell you that the members of oil states were the most effective. The famed Charlie Wilson, Congressman from Texas and subject of the movie “Charlie Wilson’s War,” was a friend of mine. I trusted him.
On one occasion, I rushed to the floor to vote — 15 minutes was allotted — and not having been on the committee that debated the bill, I looked to a friendly face — in this case, Charlie Wilson’s — for guidance on how I should vote. Wilson gave me a thumbs up, so I voted yes with my plastic card.
Fortunately, a fellow New Yorker saw my vote on the flashing board, came over and said, “Wrong vote, Ed,” explaining it was providing subsidies to the oil industry. Of course, I changed my vote.
I went over to Charlie and said, “Charlie, how could you do that to me?” He replied, “Ed, you can trust me on anything else but oil.”
Charlie was a great Congressman and I treasured our friendship. However, I never fully trusted him again, as nice as he was. Trust once breached is rarely ever fully restored.
The oil industry has taken the U.S. taxpayers to the cleaners.
We should demand of Speaker Nancy Pelosi that an independent, fairly composed committee of experts be appointed to examine the oil and gas industry and recommend to the Congress what subsidies, if any, should be available to that industry, which tax loopholes should be closed, and what taxes should be paid — including, if the committee found it appropriate, an excess profits tax.
Many in Congress, myself included when I was there, favored a tax ranging from a quarter to a dollar per gallon as far back as 1973 when our then-Arab allies of Saudi Arabia and the Gulf states imposed their oil embargo. The same amounts could probably be raised if the oil companies paid their fair share of taxes.
Those monies should be used to identify and implement alternate forms of energy. China is way ahead of us on creating wind energy and other alternatives.
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