This article first appeared in the St. Louis Beacon, May 10, 2011 - WASHINGTON - Asserting that highly profitable Big Oil companies don't need special tax breaks, U.S. Sen. Claire McCaskill and Senate allies introduced a bill Tuesday to end those subsidies and devote the savings to ease the federal budget deficit.
"This is about removing taxpayer subsidies to the five wealthiest and most successful corporations maybe in the world," McCaskill, D-Mo., said in a conference call with reporters. "They certainly have profits that have put them in the stratosphere."
The legislation, introduced with Sens. Robert Menendez, D-N.J., and Sherrod Brown, D-Oh., targets tax loopholes used by the five largest oil companies: Exxon Mobil, BP, Conoco Phillips, Shell, and Chevron. Together, those firms reported more than $32 billion in profits in the year's first quarter, McCaskill said.
"If we are going to get serious about addressing our national debt, we can no longer afford to keep giving away taxpayers' money to the most profitable companies in the world," McCaskill said, adding that she would only support such a bill if the savings went back to the Treasury to ease the budget.
The Missouri senator said that the tax breaks to oil firms have amounted to more than $40 billion over the last decade. Her bill, which would target only five of the hundreds of oil and gas firms, aims to recoup about $2 billion a year. She rejected claims by opponents of the measure that removing the tax breaks might lead to higher gas prices.
While opponents argue that oil companies need tax incentives to expand their exploration and drilling efforts, McCaskill contended that the tax breaks "are not what incentivizes them to look for more oil and gas. They are clearing going to still be looking to expand their production if it means that they will be more profitable by selling that gas."
By insisting that any savings go to reduce the budget deficit, McCaskill and other Senate Democrats who back the approach differ from the chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont., who wants to direct the oil-subsidy savings to help subsidize clean energy programs. Baucus' panel has asked oil industry leaders to testify about his approach at a hearing later this week.
The American Petroleum Institute, which represents 470 oil and gas companies, issued a statement opposing any cutback in tax credits for the industry. The institute contends that the current tax breaks are not subsidies -- and are parallel with the sort of tax incentives received by other industries.
McCaskill told reporters that she wasn't surprised by the oil industry's opposition. She said Big Oil companies make enough profits that they "can hire 14 different associations to say this is evil. But this is just common sense."