The Supercommittee continues to formulate proposals and hold public hearings in preparation to ostensibly submit a legislative package to the Congress. Whether they can reach agreement and how much deficit reduction can be achieved remains in question. But one fair and sensible provision to reduce our deficit that should be included, which would reduce the deficit by more than $40 billion over the next decade, is to eliminate tax subsidies going to big oil companies.
This week, I joined a group of my Senate and House colleagues to bring attention to the record oil and gas company profits and call on the Supercommittee to include the elimination of their tax giveaways as part of their plan.
The Congressional Budget Office (CBO) has released a report detailing our nation’s wealth disparity. The CBO report revealed that middle class Americans saw their after-tax income decline over the past three decades. But while our middle class took home less, the top one percent of earners saw their after-tax income grow by 275 percent.
Just as the wealthiest individuals in our country are doing better than ever, big oil companies are taking in record profits. In 2011, the top five oil companies – ExxonMobil, Chevron Royal Dutch Shell, BP, and ConocoPhillips – had total profits of $101 billion.
Exxon is the most profitable company in the United States. Their 2011 third quarter profits rose to $10.22 billion, marking the third consecutive quarter in which profits exceeded $10 billion.
Our third most profitable company, Chevron, saw profits more than double in the two most recent quarters: $3.77 billion in the second and $7.83 billion in the third.
I applaud the success of these companies and believe that in the United Sates individuals should, through merit and hard work, be able to build wealth. But given their profitability, it’s clear that these companies do not need their current tax breaks and the public subsidies they receive. Big oil tax expenditures are without doubt, wasteful spending of taxpayer dollars. Removing these tax breaks will not hurt the oil and gas industry, nor will it affect the price of oil.
Earlier this year, I cosponsored legislation, the “End Big Oil Tax Subsidies Act” (H.R. 601), which would end ten of the most egregious tax loopholes currently enjoyed by the oil industry. These tax provisions include subsidies for oil injection, extraction, exploration, drilling, manufacturing, pricing, and inventory valuing.
When every federal program is under scrutiny, and many at the bottom of the economic ladder are being told to do without, continuing these subsidies is insensitive to the millions of Americans depending on social safety net programs like WIC and Head Start.
With the Supercommittee struggling to find consensus on a $1.2 trillion deficit reduction package, eliminating tax subsidies to the oil and gas industry should be a no-brainer.
Rep. James Moran (D) is Virginia’s 8th Congressional District Representative in the U.S. House of Representatives.