Both Parties Wrong on Tax Breaks for Big Oil

by: Caroline Baum
for: Bloomberg

Senate Democrats want to eliminate a tax break for the five biggest multinational oil companies. Republicans oppose the idea on the grounds that rescinding a tax break qualifies as a tax increase.

Both parties are missing the boat. By confining their disagreement to select deductions for a few oil producers, lawmakers are squandering an opportunity to examine all forms of tax breaks and make a real dent in the deficit.

The tax deduction in question was enacted in 2004 and applies to all domestic manufacturers, not just oil and gas companies. It was designed to increase competitiveness in the face of the U.S.’s 35 percent corporate tax rate, among the highest in the developed world.

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