Earlier today, I posted excerpts from Florida GOP Sen. Marco Rubio’s excellent floor speech about President Barack Obama’s proposal to address the deficit with tax hikes. Among other things, Rubio asked just how many jobs the president’s proposed tax on oil companies would create. Turns out, energy analysts at consulting firm Wood Mackenzie have the answer.
According to their analysis, increased industry taxation of $5 billion a year (a little off of the approximately $4 billion currently under discussion, but still applicable) would cost the country about 50,000 jobs by 2014, an additional 15,000 by 2020 and 8,000 more by 2025. That doesn’t even take into account the indirect employment effects. Related industries would also suffer staggering job losses — 120,000 by 2014, 35,000 by 2020 and 20,000 by 2025.
Ironically enough, the proposal would also eventually decrease government revenues. While, in the first five years, a $5 billion tax increase would generate an additional $3 billion in revenue each year, by 2020, it would result in an estimated $6 billion less in revenue — and, by 2025, an estimated $10 billion less.
And neither of these effects even touches the effects on production — but that, too, would dramatically decrease, ultimately leading to a rise in gas prices and oil-based products for all of us.
In light of the facts, it’s hard to understand why the administration wants to end these tax breaks for oil companies, other than that it’s easy to make it sound sleazy that the federal government grants “tax subsidies” to oil companies. But, as J.E. Dyer explained so well yesterday, these tax breaks aren’t “subsidies” at all. Furthermore, the tax breaks in question apply to all companies, even though politicians like to make it sound as though oil companies benefit from special breaks. What politicians are actually talking about when they propose “ending tax subsidies for oil companies” is the imposition of a punitive tax on those companies. Why? Because they’re successful? Because they provide thousands of jobs? Because they supply affordable energy for the country? An honest explanation might be nice.