July 26, 2010

U.S. Oil Industry, Beneficiary of Few Tax Subsidies, Is Congressional Target in Wake of BP Disaster

State-Local Governments and Individuals Receive Biggest Tax Benefits; Among Energy Firms, Tax Benefits for Renewable Industry Dwarf Those for Oil and Gas

Washington, DC, July 27, 2010 - The U.S. oil and gas industry is the beneficiary of some tax incentives whose benefit is comparatively small, according to a new Tax Foundation Fiscal Fact.     

"With deficits as high as they are, it's no wonder Congress is re-examining special tax provisions," said the new study's author, Tax Foundation president Scott Hodge. "That's a good idea, but Congress is drawing the bull's eye on the wrong target. Oil and gas tax subsidies are small compared to what other energy firms receive, not to mention the huge tax incentives that flow to state and local governments and to individuals."     

Some special depreciation provisions will indeed save the oil industry $2.8 billion next year, but at the same time renewable energy firms will receive $11.3 billion in corporate tax subsidies, and state-local governments $12.9 billion just through their bond exemption.     

"The $11.3 billion tax subsidy to renewable energy firms in 2011 is already, in effect, a tax penalty on oil and gas firms," Hodge adds. "And as for tax provisions that benefit all taxpayers, such as the foreign tax credit, Congress should not start mucking around with those laws to engineer a penalty for U.S. oil and gas firms, especially since the U.S. has one of the highest corporate tax rates in the world."     

Tax Foundation Fiscal Fact, No. 236, "Who Benefits Most from Targeted Corporate Tax Incentives," is available online at http://www.taxfoundation.org/publications/show/26554.html.     

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.                                

To schedule an interview, please contact Natasha Altamirano, the Tax Foundation's Manager of Media Relations, at (202) 464-5102 or naltamirano@taxfoundation.org.