Big Oil Earns 45 Billion Dollars a Year Virtually Tax Free

JACQUELINE MARCUS FOR BUZZFLASH

Democrats told voters that they would not raise taxes for those who earn less than $200,000 a year.   What about those who earn $45 billion dollars a year?  Most Americans believe that oil billionaires, logically speaking, have to pay the highest income taxes.  Wrong.  Big Oil billionaires pay far less taxes than the average working American.   

Exxon/Mobil earns $45 billion dollars in profits a year.  Guess how much corporate income taxes Exxon/Mobile has to pay from that $45 billion? A pittance. 

Big Oil should pay 35 percent of their earnings in federal taxes, but thanks to our oil-friendly congress, they pay a mere 5.3 percent.  That’s far less than working Americans have to pay.   

You can count on the average American paying much higher taxes than U.S. oil executives that earn billions of dollars a year.  So while Kerry and Obama target those who earn $200,000 annually, the oil billionaires get a tax-free pass.   

Republican candidates yell and scream about not raising taxes, but they’re not thinking about the Tea-baggers’ taxes; no, they have their bosses in mind, the ones that have them on a tight leash.  They owe their souls to the industrial polluting billionaires, Big Oil, which means they’ll do everything in their congressional power to protect Big Oil from paying their fair share of taxes.   

That’s how corrupt the system has become over the last decade.  The Bush administration broke all records by reducing federal corporate taxes for corporations to its lowest percentage in nearly six decades. (1) 

Thus, if you’re a Big Oil billionaire, jackpot! You don’t have to contribute a dime to the country.  Well, maybe a dime compared to your earnings, but that’s about all.  You don’t have to pay your fair share of taxes for schools, roads, bridges, hospitals, educational grants, social security, Medicare, Medicaid, police, firemen, postal services…you get a free pass! while working Americans carry the largest tax burden on their shoulders, taxes that are, incidentally, being slashed for all the above social services so that they can be given to the Pentagon weapon contractors, Big Oil, and Wall Street bailouts. 

Just how far would our congressional members go for campaign contributions? What would they give away to Big Oil in exchange for a pocketful of campaign change? Well, they’ve given away our national forests, our oceans, our public lands, our majestic mountains, our rivers, our lakes, our wildlife—and the final freebie gift in return for campaign contributions: no taxes.  Wow! that’s quite a bargain! For a couple hundred thousand, Big Oil can own the entire country. 

We, on the other hand, have to pay twice for gasoline taxes: once at the pump and again through Big Oil tax abuse benefits such as subsidies, loopholes, and a little thing you never hear about at political debates: “depletion allowances”.    

History lesson: Republican Andrew Mellon, one of the biggest corporate thugs that ever slithered his way inside the White House, was appointed treasury secretary from 1921-1932 for good corporate thievery reasons.  Mellon cut taxes, regulation and oversight on corporations, especially Big Oil, and he basically initiated huge depletion allowances which began under President Wilson. 

What exactly is a depletion allowance?  Example: Big Oil says to the government: “We may be running out of oil in these wells—we haven’t yet, but you’re going to have to pay us anyway by allowing us to deduct from our taxable income.  Mellon increased that deduction from 5 percent to 27.5 percent that companies received from their wells, with no limit on the total amount of money that a company could deduct.  Mellon also eliminated the antitrust regulations, which led to Big Oil mergers that made a single polluting industry more powerfully wealthy than all the world governments combined. (2)  

So much for those monopoly laws…While Mellon increased corporate welfare for the super rich, he reduced government spending for the poor.  

Currently, the depletion allowance runs somewhere between 15%-25% of the gross income derived from oil and gas wells from Big Oil’s taxable incomes.    

That’s a loss to our country’s national budget of billions a year that could be used to pay down the national deficit. And that’s only one tax scam from many loopholes.  Big Oil, for instance, is allowed to deduct up to 70% from taxable income for oil exploration, which comes out of our pockets.   

There’s also a tax break known as “enhanced oil recovery credit”.  It encourages oil companies to go after reserves that are more expensive to extract—and far more polluting. (3) 

Keep in mind that the oil extracted from oceans and federal lands belong to the public.  Big Oil gets the oil for free and then sells it back to us for big profits, $45 billion dollars a year profits.  Read Buzzflash’s Editor Mark Karlin’s commentary on this subject, The Oil Belongs to Us, Not British Petroleum.  

Together, these Big Oil tax benefits exceed the value of the energy produced by that oil.  In other words, it would be cheaper for the government to just buy gasoline from the companies and give it to taxpayers free of charge. (4)   

The bottom line is that we are essentially losing billions and billions of tax dollars from corporate oil “welfare” tax breaks.  If Big Oil paid their fair share of taxes, and if the bloated Pentagon budget was cut by 35%, the national debt would disappear overnight.  But what do congressional members target instead?—Social Security, extended unemployment, Medicare, educational funding, in short, our public services.  

You will never hear this subject of corporate welfare: Big Oil tax benefits, discussed at national or local political debates or in the mainstream news.  By analogy, imagine if we were trapped in a cage that is being lowered into the sea. There’s a TV screen that show pundits talking about the big, bad immigrants, Muslim Mosques, terrorists, Obama’s birth certificate…Everyone starts fighting over these distracting issues, but no one on the TV screen or in the cage bothers to ask why the cage is being lowered and if it can be stopped.    

That’s the situation we’re in.  The oil tyrants and their government paid-off whores want to keep us occupied and divided with inflammatory arguments while they step out the back door, counting their billions of tax-free dollars. 

Sources: 

1-2) The Tyranny of Oil; Antonia Juhasz; pages 76-77

3-4) Take the Rich Off Welfare; Zepezauer & Naiman; pages 100-101