For most people the issue of corporate taxation is both intriguing and offputting in equal measure. The complex and often contradictory nature of the enormous US tax code allows for a combination of passion and boredom that extends to almost no other region of policy.
That is part of what has made attacking the US tax code in an effort to simplify it or make it reflect policy goals so challenging; companies with tax lawyers on call can take advantage of seemingly innocuous or even beneficial tax policy, only to be accused later of corruptly using ‘loopholes’ or ‘subsidies’ to run their businesses. At the same time, financiers and corporations build otherwise unsustainable business models around the tax code rather than at the intersection of supply and demand, in turn warping the very markets they intend to serve.
If the tax code is the unmovable object in the 2012 election cycle, the worsening rounds of budget crisis are the unstoppable force.
Debates over such intricate tax mechanisms as 2004′s section 199 tax break to encourage domestic manufacturing and how the energy industry uses those breaks has been threatening to burst into the open for months. A simmering debate over the production tax credit used to support wind power in the US was an early sign of the stakes for companies, and the American Petroleum Institute’s unprecedented Votes4Energy campaign served as a warning signal of the central role that energy and energy tax policies would start to play in the election cycle.
The inside-the-Beltway discussion is now set to spill over into the public, with the left-leaning Center for American Progress announcing it intends to release a series of reports on the Romney campaign’s tax proposals in the coming months. As a testament to the importance of energy in the 2012 cycle, the think tank started with the Romney campaigns plans for the oil industry.
The CAP says that by its accounting the Romney proposals would not only extend current tax breaks utilized by a group of “Big Five” oil companies to the tune of $2.4 billion each year, but would expand the breaks by a further $2.3 billion. That amounts to a 29% tax cut for companies that cumulatively reported more than $100 billion in profit in 2011, claimed report co-author and CAP Senior Fellow Daniel Weiss on a media call.
Senator Robert Menendez of New Jersey and Representative Chris Van Hollen joined the CAP call today, and both fired off some quotable lines, noting that proposals in the House and Senate to cut the tax breaks under discussion had failed in recent months despite a series of budget crises of which the “fiscal cliff” is the latest iteration.
“The clock is ticking,” Menendez said, quoting higher numbers than CAP for “big oil tax breaks” that amounted to more than $4,500 each minute. All tax breaks for companies will need to be reevaluated in light of the impending sequestration cuts that would underline defense and other spending.
Republican House members expect the US consumers ‘to pay for oil twice; once at the pump and once through the tax code,” Van Hollen said, joining the media call between votes.