When Will the Coal, Oil, Gas, and Nuclear Industries Stand On Their Own Feet?
The American Wind Energy Association released an analysis on Wednesday,
detailing how the wind industry could phase out reliance on federal tax credits
over a six-year time period. In contrast to the wind industry's bold move,
there is no end in sight for the fossil fuel subsidies that polluting
industries have enjoyed for almost 100 years.
Indeed, while the fledgling wind industry was able to develop a plan for
moving off of subsidies after just two decades, the fossil fuel industries
continue adding to our national debt by taking billions of taxpayer dollars to
pollute our air and water. The wind industry has taken the first steps toward
moving off of federal subsidies, and it is past time the fossil fuel industry
did the same.
For nearly a century, Big Polluters’ allies in Congress have given away billions of dollars in tax breaks to fossil fuel companies that pollute our air and water. Despite record breaking profits, these corporations want to keep padding their profits with more than $100 billion in unfair tax breaks. It’s high time the coal, oil and gas industries started paying their fair share.
Many of these subsidies are narrowly tailored to favor fossil fuel companies and have no expiration date. What’s more, these tax breaks provide preferential treatment to industries that are making windfall profits and simply do not need the support of federal dollars. For example, the five largest oil companies alone made $137 billion in profits last year.
Some of the most egregious tax breaks and loopholes for the fossil fuel industry include:
- A 2004 law aimed at incentivizing US manufacturing, contains an extra provision that allows the oil, gas and coal industries to claim they are “manufactures” as well, granting them huge tax deductions.
- Oil, gas and coal companies are allowed to deduct 15 percent of their sales revenues to reflect declining value of their investment, regardless of the actual value of that investment.
- Many natural gas pipelines, including the Alaska pipeline, are granted a special exemption allowing them to depreciate the value of the pipeline over 7 years, rather than the standard 15 years, saving hundreds of millions of dollars in taxes.
- Natural gas currently qualifies as an “alternative” fuel, allowing the industry to enjoy a tax credit intended for less mainstream fuel sources.
- Tar sands oil -- the dirtiest oil on Earth -- is exempt from financing the Oil Spill Liability Trust Fund, padding oil company profits with money that should go towards cleaning up future oil spills.
- For tax purposes, oil companies can deduct expenses related to cleaning up their spills, essentially getting a tax break for paying to clean-up their own mess. In fact, BP used this very loophole to deduct billions of dollars related to cleaning up the Gulf Coast oil spill.
- A 1951 provision allows coal companies to treat income from coal mines as a capital gain, taxed at 15 percent maximum, instead of regular income which could be taxed at a much higher rate.
When a company is able to write off expenses for cleaning up an oil spill they caused, it's clear that these tax breaks have gone too far. It's time to put a stop to this senseless giveaway and end fossil fuel subsidies once and for all.
-- Dave Hamilton, Beyond Coal Director for Clean Energy
