Newspaper article Charleston Gazette Mail

Foreign Relations Report Distorts Facts ; Fossil Fuels Industry Does Not Receive Taxpayer Subsidies

Newspaper article Charleston Gazette Mail

Foreign Relations Report Distorts Facts ; Fossil Fuels Industry Does Not Receive Taxpayer Subsidies

Article excerpt

A report from the Council on Foreign Relations is music to the ears of environmental activists. It claims to show that if the federal government ended its preferential tax treatment of the oil and gas industry, public revenues would jump by billions and climate change would slow considerably. ADVERTISING inRead invented by Teads

This is pure fantasy. The reports methodology is flawed, confusing tax deductions with subsidies and completely overlooking the vital role oil and gas plays in the American economy.

Subsidies are a direct transfer of money from the U.S. Treasury to a private company. American oil and gas companies receive zero subsidies.

What these firms do receive, however, is the same tax treatment as all other businesses, which, in part, allows them to deduct certain operating expenses. This deduction is typically used to offset the substantial costs of drilling and preparing wells. These deductions encourage energy companies to grow and create jobs.

And the biggest tax benefits arent going to Big Oil. In 1975, federal lawmakers partially repealed a tax code provision known as Percentage Depletion, which allowed fossil fuel producers to deduct the deprecation of their reserves.

Only small and independent operators are now allowed to make such write-offs. Large oil companies cannot. Likewise, credits such as the Enhanced Oil Recovery Tax Credit and Well Tax Credit are almost exclusively used by small and mid-sized operations.

These facts have been lost on both the media, which regularly repeats the myth that energy companies receive special tax treatment, and the White House, which has long advocated for steep tax hikes on the energy industry. …

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