President Joe Biden’s plan to eliminate subsidies from oil and gas companies and increase taxes on corporate polluters would increase government revenues by $ 35 billion over the next decade.
The benefits of these grants are currently concentrated “at a handful of large corporations,” the Treasury said in the Made In America Tax Plan. released Wednesday. The report examines tax proposals in Biden’s $ 2.25 trillion economic package unveiled last week.
The plan will probably prove difficult resistance of the oil and gas industry and its supporters on Capitol Hill. Biden surprised many executives in the early months of his presidency by canceling the Keystone XL crude oil pipeline and limiting drilling on federal land.
“The main impact would be on the profits of oil and gas companies,” the Treasury said in the report. “Research indicates that there is little impact on gas or energy prices for US consumers and little impact on our energy security.”
Give away tax
Estimated benefit of fossil fuel subsidies on US production in 2018
Source: “Producer benefits from implicit fossil fuel subsidies in the United States” by Matthew Kotchen, Yale University and National Bureau of Economic Research.
Oil and gas producers take advantage of elements of the tax code that allow them to deduct drilling costs early in the life cycle of a project and offset losses over several years. Industry groups have argued that these measures are not specific to fossil fuels and are intended to encourage investment.
Still, Biden’s tax plan was clear in its intent to take the oil and gas industry out, while providing a range of incentives for clean energy, climate change resilience, and carbon storage.
“Tax preferences for oil, gas and coal producers are currently lowering their tax liabilities relative to other companies,” the Treasury said. “Fossil fuel companies also benefit from substantial implicit subsidies, as they sell products that create externalities but do not have to pay for the damage caused.”
The document quoted academically research published by Proceedings of the National Academy of Sciences found that EQT Corp., Exxon Mobil Corp., BP Plc, Chesapeake Energy Corp. and Chevron Corp. were the five main beneficiaries of “implicit subsidies” to fossil fuel producers in 2018.