By IPI President Tom Giovanetti
Texas Insider Report: AUSTIN Texas -- A standard bit of President
Obamas economic rhetoric has been to criticize tax breaks for companies that are doing things he doesnt like such as doing business overseas or drilling for oil & gas.
High oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks he wrote in a
letter to Congress last year. And the Framework for Business Tax Reform that the President
released in late February calls for eliminating oil and gas tax preferences.
The language in the Framework attempts to take the moral high ground declaring that we should eliminate all tax expenditures for specific industries with a few exceptions that are critical to broader growth or fairness.
But of course allowing yourself a few exceptions provides a loophole wide enough to drive a windfarm though. And President Obama has.
Lets cross reference the Presidents rhetoric with a paper that was released yesterday from the Congressional Budget Office (CBO) which answers the musical question
How Much Does the Federal Government Support the Development and Production of Fuels and Energy Technologies?
The CBO paper tells us that tax preferences for fossil fuels have already dropped significantly since 2007 and are at or near average levels going all the way back
to 1992. So the idea that somehow in recent years tax preferences for fossil fuels have gone up is simply untrue. Theyve gone down.
But guess which energy tax preferences HAVE exploded since oh 2009? Tax preferences for efficiency and renewable energy were $16 billion or almost four times are large as the tax preferences for fossil fuels. Clearly the President likes tax preferences for energy production just fineso long as he can use them to favor his preferred types of energy production.
If fiscal responsibility demands cutting down on tax preferences for energy production its pretty clear that its the preferences for renewable energy that are the problem not the preferences for fossil fuels.
But if its just all about politics well constantly be changing the tax code to favor certain industries and disfavor others depending on the political winds.
Heres an idea: Lets go with the President on we should eliminate all tax expenditures for specific industries . . . . and just stop there. Lets cut ALL corporate welfare and favoritism out of the tax code making the tax code truly neutral so that our industrial base and the mix of industries is decided in the marketplace rather than being manipulated by politically driven agendas?
In the meantime if youre worried about tax preferences
for energy production fossil fuel preferences arent the culprits.
Todays TechByte was written by IPI President Tom Giovanetti. The Institute for Policy Innovation (IPI) advocates for lower taxes fewer regulations & a smaller less-intrusive government
