President Joe Biden’s plan to eliminate subsidies demanded by oil and gas companies and increase levies on polluters will increase government revenue by $ 35 billion over the next decade.
The benefits of these subsidies are currently concentrated ‘within a handful of large enterprises’, the Treasury said in the Made In America Tax Plan. Released Wednesday. The report elaborates on tax proposals in Biden’s $ 2.25 billion economic package launched last week.
The plan is likely to be tight resistance of the oil and gas industry and its supporters on Capitol Hill. Biden has already surprised many executives in the first few months of his presidency by canceling the Keystone XL pipeline and restricting drilling on federal land.
“The biggest impact is on the profits of oil and gas companies,” the treasury said in the report. “Research indicates that American consumers have little impact on gasoline and energy prices and that this has little effect on our energy security.”
Giving away tax
Estimated benefit from fossil fuel subsidies on US production in 2018
Source: ‘The producer has benefits from implicit subsidies for fossil fuels in the United States’ by Matthew Kotchen, Yale University and the National Bureau of Economic Research.
Oil and gas producers benefit from elements of the tax code that enable them to deduct drilling costs early in the life cycle of a project and are able to bear losses for several years. Industry groups have claimed that these measures are not specific to fossil fuels and that they are designed to encourage investment.
Nevertheless, Biden’s tax plan was clearly intended to exclude the oil and gas industry, while providing a large number of incentives for clean energy, climate change and climate change.
“Tax preferences for oil, gas and coal producers today reduce their tax liabilities compared to other businesses,” the treasury said. “Fossil fuel companies also benefit from substantial implicit subsidies, because they sell products that create externalities, but they do not have to pay for the damage caused.”
The document cited academically research published by Proceedings of the National Academy of Sciences found EQT Corp., Exxon Mobil Corp., BP Plc, Chesapeake Energy Corp and Chevron Corp. were the top five beneficiaries of ‘implicit subsidies’ to fossil fuel producers in 2018.