Eliminating these tax incentives is not such a bad idea. With the U.S. dollar weakening as it has been over the last couple of years, we may very well end up in a situation where U.S. taxpayers subsidize an oil industry whose primary source of revenue is the EXPORT of oil from the U.S. to foreign customers.
Yeah, I oppose subsidies. I’m not sure that’s really what this is, though. If you invest in equipment, you get to depreciate it for tax purposes. If you invest in oil rights, shouldn’t you also get to depreciate it as you pump out the oil? If there is an element of subsidy in it, though, I agree it should be eliminated. On the other hand, there is no question that it would result in less domestic oil production, irrespective whether it’s a “subsidy” or not.
They paid $105.7 Billion in Taxes.
Income Taxes - $29.9B
Sales Based Taxes - $31.7B
All Other Taxes - $44.1B
Total Taxes - $105.7 Billion
http://www.exxonmobil.com/corporate/files/corporate/news_release_earnings4q07.pdf
I don’t consider profits of 10¢ on the dollar excessive. Business exist to make money or they would not exist.
But I do consider taxes 260% higher than profit very excessive. What other industry pays taxes at that rate?
I doubt any other industry could afford the oil industry's current rate of "subsidies".
Those tax incentives are not tax incentives at all. They are reductions on royalties paid on leases in predominately deep waters of the Gulf of Mexico. You have to entice private enterprise to go explore and drill in areas where there is not the technology to do so yet. The R&D cost is massive to even think about pulling oil from the Central Gulf of Mexico given the depth of water and the subsequent depth of the underlying gas/crude fields below the subsurface. The pressures on equipment are tremendous.