Senin, 03 November 2014

Controversy Over Oil Company Tax Breaks

The disparity between rising gas pump prices, increasing profits for the oil companies, and the huge contradicting tax breaks available for oil industries continues to cause discontent among lawmakers, tax and financial experts, and the public at large. The argument is that tax breaks should translate in lower pump prices and not translate to higher profits as is the case today. This oil company debate seems to be at the top of the Congress's agenda in the recent past.

Top Oils Company Executives Summoned

Company executives from the top 5 oil companies, namely Exxon Mobil konsultan pajak jakarta, BP, Shell, Chevron, and Conoco Phillips, were invited earlier in May 2011 to Congress' Senate Finance Committee to try and work out a solution to the rising pump prices and the tax breaks that seem to only benefit the oil companies. However, in their argument, the executives insist that they are leading taxpayers and pay millions of dollars in taxes to the IRS. They also say that removal of the Domestic Manufacturing Deduction tax break would reduce their domestic production as it would become uneconomical to produce within the U.S. as opposed to outside the country. Another argument that they posed was that removing the Domestic Manufacturing Deduction tax break for only one industry in the economy, the oil sector, would be unfair. The officials suggested that instead of sidelining the oil industry, a better solution was a proposed "Corporate Tax Reform" that had been forwarded to Congress in the recent past. These reform-proposals suggested reducing overall corporate taxes and have the funds compensated by removing various tax credits for the corporations.

Critics Respond to Executives Defense

However, most critics and opponents of the controversial tax credits for oil companies have dismissed the arguments posed by the oil company executives as just an attempt to keep the goodies offered by Uncle Sam through hefty tax breaks. After all, any influential taxpayer would do all in their power to keep tax breaks coming their way. They say that removal of the Domestic Manufacturing Deduction tax break for the oil companies was fundamental to cut off the unfair advantage for the oil sector (as this sector was the most profitable in the U.S.). They also argued that replacing the removal of tax breaks with lower tax rates for corporations as suggested by the Corporate Tax Reform was not a priority as the funds from reduced tax breaks are needed to help meet the government deficit. As for the argument against local production, critics claimed that whether gas is produced locally or not, it does not translate to lower gas prices anyway.

Congress with the Final Say

Various bills have been proposed in Congress to try to address the seemingly unfair advantages that oil companies enjoy through tax breaks. The most recent is the S. 940 bill proposed by Senator Charles Schumer that seeks to have reduced tax breaks for top oil companies, a move that will result in $21 billion in extra taxes raised in the next 10 years.

Even as the issue of the huge tax credits enjoyed by oil companies continues in the limelight, and as the awareness of these credits keeps growing, all eyes remain on Congress to see whether they will ultimately resolve the issue.

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