Politico reported last week on the latest occurrence of a Washington tradition, “the annual Capitol Hill version of the perp walk for Big Oil.” Executives from ExxonMobil, Chevron, ConocoPhillips, Shell Oil, and BP were summoned before the Senate Finance Committee, where the companies were accused of being large and of selling a product whose price has recently risen in world markets.
It would be bad enough if the campaign against these five disfavored companies involved only the political theater of a perp walk. But, the Senate is also poised to vote on a bill, the proposed Close Big Oil Loopholes Tax Act, that would single out the five unpopular firms for tax treatment not applied to other firms. While it may seem hard to believe that such a glaring violation of the rule of law could be seriously considered, the precedent has already been set. Congress adopted laws in 2006 and 2007 requiring these disliked firms to write off some business costs (geological and geophysical expenditures) more slowly than other producers. Like those laws, the Senate bill shrinks from identifying its targets by name, but instead describes them by gross receipts and volume of production. As I have previously described here and here, there have been other efforts in recent years to target these companies for disparate tax treatment.
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One provision of the Senate bill would deny the five companies a tax break for production of goods inside the United States. As I have explained before, a 2008 law already denies all oil and gas producers one-third of this tax break, while leaving it fully available to producers of such items as firearms, tobacco, and alcohol. That law did leave oil and gas producers better off, though, than producers of adult movies, who are completely denied the tax break. The current bill would deny the five companies, and only them, the entire tax break, consigning them to the same tax category as the adult-film industry.
Read More at the American By Alan Viard, the American