CORPORATE WELFARE IN THE OIL PATCH….Alex Knapp thinks that a windfall profits tax on oil companies is a bad idea:
However, one thing that I did notice when I was doing a little google-fu on the issue is that there appears to be approximately 20 to 50 billion dollars spent by the federal government per year on direct subsidies (as opposed to tax breaks) given to the oil industry each year. Unfortunately I can’t pin down the exact number any better than that — it appears to vary every year and spread out amongst different agencies. Still, the GAO should be able to track the exact numbers down, so instead of an extra tax on oil companies, why not just eliminate their direct subsidies? Not only would that generate more revenue than the “windfall tax” (estimated to be $15 billion), but it would do so without getting the federal government into the problematic business of deciding how profitable companies are allowed to be.
I had exactly the same thought this morning, and I ended up in exactly the same spot as Alex: I couldn’t figure out which subsidies/tax breaks still existed, how big they are, who they go to, or who voted for them. Royalty relief alone was enough to bring tears to my eyes. If I spent several months on this topic instead of half an hour, maybe I could figure this all out, but surely someone else has already done this?
Anyway, this really ought to be the liberal rallying cry: forget a windfall profits tax, let’s work first on getting rid of the massive corporate welfare infrastructure we’ve constructed for an industry that really, really doesn’t need it. Not as sexy as a gas tax holiday, maybe, but it makes a helluva lot more sense.