Tax big oil
If anyone thinks that forcing Big Oil to pay its fair share of federal taxes will suddenly lower prices the rest of us pay at the pump, then Utah's Sen. Orrin Hatch was right. Thursday's Senate Finance Committee grilling of execs from the Big Five was, indeed, a dog and pony show.
But if anyone thinks that the federal deficit is a serious problem a group of folks that, on most other days, includes Hatch among its more vocal members then the matter before the committee was deadly serious.
U.S. Tax Code benefits that oil companies seek out with at least as much vigor as any new pocket of petroleum mean higher profits for the firms, and lower revenues for the United States Treasury, amounting to some $4.4 billion a year.
President Obama and the Democrats in the Senate want to end those tax breaks. Hatch does not. On this matter, the Democrats are right, and Hatch is not only wrong, he is being downright dishonest if he keeps defending the tax breaks even as he decries the size of the national debt.
With pre-tax profits not revenues, profits approaching $200 billion this year, the oil firms have little credibility when they claim that coughing up a little more to the IRS would matter a whit to their bottom line, their hiring and their efforts to find, ship, refine and market gasoline and other petroleum products.
There are factors far more important than tax rates to consider when a multinational giant is making decisions about where to drill for oil. The most important variable is the market price of that oil, something that bears no relation to the companies' tax burden, but weighs greatly on the minds of those trying to figure out if it is worth it to go looking for more crude.
And the benefits of looking for it here, as opposed even to such low-tax, low-regulation places as Africa and South America, include a relatively stable economic and political environment, a legal system that protects property and investment, a highly developed infrastructure and, perhaps most important of all, proximity to their most insatiable customers. Enough to balance out a whole lot of tax burden.
The nation those oil companies are privileged to do so much business in needs more revenue if it is to remain such a good place to do business. That industry deserves no special breaks, though its leaders raise a good point when they say the whole burden of balancing the budget should not, and cannot, be theirs alone.
But there is no reason why the oil industry should not be the first one to step up to the plate and do more to help pay for the civilization that makes their own profits possible.