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Despite BP Spill, Oil Companies Still Keep Tax Breaks

June 16, 2010

The Senate voted down an attempt to repeal $35 billion in tax breaks handed out to oil and natural gas companies, even as Washington professed to be getting tough with the oil companies.

Sen. Bernie Sanders, I-Vt., had proposed an amendment to repeal the lucrative tax breaks, but his amendment was defeated by his Senate colleagues in a lopsided 61-35 vote on Tuesday. Sanders had introduced the amendment to the tax extenders and jobless benefits bill, echoing provisions in the Obama administration’s proposed budget for next year. The Sanders amendment would have devoted $25 billion of the savings to deficit reduction. The remaining $10 billion would have funded an Energy Efficiency Conservation Block Grant Program.

Sanders pointed out that the oil and gas companies have profited handsomely from the tax break. “Exxon Mobil, the most profitable corporation in the world, not only paid no U.S. taxes last year, but also received a $156 million tax refund,” he noted.

Other companies that took advantage of tax loopholes in 2009, according to reports on file at the Securities and Exchange Commission, include Chevron, which received a $19 million tax refund; and Valero Energy, which received $157 million from the IRS. Independent oil and gas companies which made a combined $3.7 billion in profits in the first quarter of 2010 and $25.7 billion in revenue also received generous tax breaks from the IRS, Sanders noted.

Regardless of the record amounts of oil still pouring into the Gulf of Mexico from the BP oil rig explosion in April and the tongue lashing delivered to oil company executives during congressional hearings while the TV cameras were rolling on Tuesday, the oil companies will still get to keep their overly generous tax breaks. Unfortunately, that's the way things work in our nation's capital.

Comments (2)
Hi, Monica. Some of the specific provisions in the Sanders amendment included a repeal of the expensing and 60-month amortization of intangible drilling costs, repeal of percentage depletion for oil and gas wells, and a denial of the deduction for income attributable to domestic production of oil, natural gas, or primary products thereof.
Posted by MikeCohn | Thursday, June 17 2010 at 10:55AM ET
Ah, the notorious "tax loopholes." Was this article meant to be an editorial?? It refers to the "overly generous" tax breaks, without even telling us which tax breaks were being targeted. It's reasoning like this that resulted in the AMT - bad taxpayers are taking advantage of perfectly legal tax provisions that Congress passed to encourage certain behavior. And when they engage in those behaviors too much - slap another tax on them. This is NOT a useful article about this issue.
Posted by fac_mnewman | Thursday, June 17 2010 at 10:34AM ET
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