What should we do with these tax breaks for Big Oil?

A lot of talk has been flying around lately about the breaks that Big Oil gets on their taxes from the Federal Government. To ring in on the topic I found this awesome chart from 350.org.

Now as you follow the flow you will see a lot of rhetoric, and to cut through some of that really quick let me make this clear. The oil companies are not the only companies out there that receive major breaks and benefit from incredible holes in the tax code. None of these practices are appropriate on ethical and business levels. All across the board we should be looking at ways to eliminate tax breaks for companies earning huge profits like they are or for those who evade paying their taxes by moving parts of their operations out of the country.

Also I’m not going to talk about domestic offshore drilling, you can probably guess how I feel about that and I will tell you that even trying to get domestic offshore going will make no real impact.

So what are we allowing the oil companies to get away with? Well we give the oil industry a 41 billion dollar tax break annually. This tax break could be equal to $41,000,000,000 that we can spend on domestic needs. The removal of these breaks would not cost the consumer much more than they already spend at the pump. The jumps in price would likely look normal to the average consumer. Now that is because the profit is not made on an individual gallon of gas, a few pennies per gallon, but in the quantity that the oil companies sell. Most of the costs associated with the price of fuel at the pump are state and federal taxes, which is why I can go to Vermont and buy gas for about 20 cents less than across the border in New York. It is also why I can buy gas for less in certain counties of New York compared to others.

How much are these companies making in profits? Record breaking profits, in the tens of billions of dollars, Exxon made $52.9 billion last year in profit. All while the rest of the economy is in decline. Now I’m not saying that we should punish these companies for doing better while the rest of us suffer, I’m simply saying that they should pay their taxes like you or I. And there are plenty of people who support this idea. Our President, Barak Obama, Former Shell CEO John Hofmeister, House Speaker John Boehner [R], and the U.S. Treasury all support the removal of these subsidies.

So this sounds like a good call, remove the subsidies and use the money for good, right? Certainly we could use an extra $41 billion, we have some debt collectors from across the Pacific that might want to get paid back, there are huge budget deficits across the nation, and could use some new roads, bridges, and/or renewable power sources. One specific we can take from the chart is that we could DOUBLE the amount of energy generated in the US by renewable wind energy. Now I’m not super sold on industrial scale wind power, but I’d rather see that than more record breaking oil company profits. How about you?

So what else should we look at? Well for starters maybe we can legitimize these corporate tax breaks with something that would benefit everyone, that’s diplomatic isn’t it? Perhaps we could allow tax breaks to companies is they create jobs in the U.S. for U.S. citizens? Or maybe they get a break in taxes if they spend a high percentage of their profits to fund domestic renewable energy? Ideas like these would be mutually beneficial to the companies and to American citizens. Combine these ideas with a new tax code, updated for the 21^st century and its businesses, and maybe we can think our way out of this very unpopular and controversial point of contention.