In typical Obamanomics fashion, the tax code is being used as a conniving way to promote favored activities and discourage others, in this case, punishing a small handful of profitable big oil companies by forcing a different set of tax laws only on them and not across the board.
The Washington Examiner's Tim Carney explains the flawed policy of a bill that would raise taxes on Exxon, Chevron, Conoco, Shell and BP, but not on smaller oil companies. Read Carney's analysis of the bill after the break, and let us know what you think of this latest move against big oil in the comments.
As Carney explains,
The Democrats' current war on "subsidies for Big Oil" is not about ending special favors for the oil industry. It's about singling out a handful of big oil companies and punishing them with tax increases. This reflects Obama's general view of government's role in the economy: Rather than being an impartial referee evenly applying neutral rules, the president uses taxes and regulations to reward "the good guys" and punish "the bad guys."
In his budget, Obama proposed many tax increases on oil companies, and Democrats brought some of these proposals to the Senate floor in the "Close Big Oil Tax Loopholes Act" (S 940), sponsored by Sen. Bob Menendez, D-N.J. Some of Obama's and Menendez's provisions could be interpreted as leveling the playing field and rationalizing the tax code. But mostly, the bill just exacts punishment on a profitable industry that's politically unpopular.
First of all, the bill doesn't touch our two biggest oil subsidies -- massive federal spending on highways, which promote driving, and a trillion dollars on wars to prop up favorable regimes in the Mideast and North Africa.
But the first sign this bill isn't about fairness is that taxes are raised only on "oil companies with gross receipts in excess of $1 billion in a taxable year and an average daily worldwide production of crude oil of at least 500,000 barrels a year." In other words, this bill would create one set of tax laws for most oil companies, and another set for Exxon, Chevron, Conoco, Shell and BP.
And most of the tax changes amount to straightforward discrimination against these companies.
Democrats have painted a dichotomy that reducing spending can only come in the form of ending billions of taxpayer giveaways to big oil companies or cutting Medicare and Medicaid.
As Harry Reid said last week, "If we are serious about reducing spending, ending tens of billions in taxpayer giveaways to big oil companies shouldn't be one of the difficult decisions we have to make. When the other side says the alternative is to end Medicare, slash Medicaid, and put millions of seniors at risk, the choice is that much clearer. We cannot take with one hand from those who can least afford it and give with the other hand to those who can."
Harry Reid and his cohorts see a tax code that treats all companies equally through tax breaks as unfair, but a tax code that heavily penalizes only the five biggest oil companies through higher taxes as completely fair. What are your thoughts on these new provisions?