The following was originally published on “StopTheSubsidies.com”, a humorous and sarcastic assessment of the fossil fuel industry funded efforts to hypocritically attack renewable energy tax incentives. The point of the authors was clear. Anyone opposed to tax incentives for renewable energy should also oppose incentives for all energy producers. How do we define “incentives”? It’s easy. An incentive is any governmental action that reduces taxation, regulatory burdens, liability, or other burdens for specific private businesses.
Artificial distortions in energy markets are philosophically unacceptable. Lawmakers at the local, state, and federal level should eliminate programs that help energy companies deliver affordable, abundant power to American consumers.
Show your constituents that you are committed to ending free market-distorting incentives. All of them, for everyone.
FREE MARKET ENERGY PLEDGE
We invite all elected officials to become familiar with the ways in which subsidies are distorting the free market for energy in America. Read the list, then show your support for free markets by taking the pledge today. Email your pledge email@example.com. For more information, contact us by email or use the sign up box on the right.
“I believe that free markets are essential to American prosperity;
that government intervention in the energy marketplace is
detrimental to consumers; and that energy subsidies unfairly
alter the natural functioning of our economy. Therefore, I commit
to vote for legislation that ends subsidies for all energy sources,
regardless of type. I will vote to repeal any preferential tax
treatment, incentive, subsidy, or other financial mechanism that
subsidizes or encourages the production of energy.”
THE LIST OF SUBSIDIES
The following are a few examples of changes that need to be made to our current tax code (Currrent 2018). This may not include the many state and local energy subsidies and tax incentives currently in place. We are looking for more to add to the list. You may suggest additions to this list by emailing: firstname.lastname@example.org.
Our Elected Officials Should Work To:
- Eliminate the wind energy Production Tax Credit (PTC).
- Eliminate the solar energy Investment Tax Credit (ITC).
- Eliminate royalty relief, including for deep gas and deep water production, 43 USC 1337, 42 USC 15904 and 15905. This provision repeals authority for the Department of Interior to provide discretionary royalty relief, and also repeals special royalty relief for deep water drilling.
- Repeal the Ultra deep water research program, 42 USC 16371. This repeals 2005 public-private partnership to increase offshore production of oil and gas.
- Uncap the $75 million limit for spill liability and $350 million liability limit for pipeline cleanup for tar sands, 33 USC 2704. Current law limits economic damages for an individual offshore oil spill to $75 million, this section would make liability unlimited so that corporations are fully responsible for the damage they cause, not the taxpayer. Uncap liability for spill damages, currently at $350 million, for tar sands pipeline operators, thereby protecting taxpayers from cleanup costs.
- Eliminate enhanced oil recovery credit, 26 USC 43 – 15 percent income tax credit for advanced oil recovery investments.
- Eliminate marginal wells credit, 26 USC 45 I, which provides a tax credit for production from marginal and inefficient wells.
- Eliminate the deduction for tertiary injectants 26 USC 193, which allows deduction for advanced oil recovery investments.
- Eliminate manufacturing deduction, 26 USC 199(d)(9). This provision, included in a 2004 law, allows oil and gas industry to claim they are ‘manufacturers’ and take huge tax deductions aimed at incentivizing manufacturing in America.
- Eliminate special rule for oil, gas wells, 26 USC 461(i)(2), which accelerates deductions for oil and gas corporations.
- Eliminate percentage depletion, 26 USC 613(A), which allows oil and gas companies to deduct 15 percent of their sales revenues to reflect declining value of their investment, without regard to the actual decline in value of their investment.
- Eliminate passive loss exemption, 26 USC 469(c)(3). This exemption lets oil/ gas company owners and investors use losses from fossil fuel investments to shelter other income.
- Eliminate special depreciation for Alaska natural gas pipeline, 26 USC 168(e)(3). This eliminates a special depreciation provision allowing 7 year depreciation for Alaska natural gas pipelines, instead of standard 15 year depreciation.
- Eliminate amortization for pollution control, 26 USC 169.
- Eliminate refinery upgrade deduction, 26 USC 179(c), which eliminates option to expense 50 percent of costs to upgrade refinery.
- Eliminate expensing of capital costs to comply with EPA rules for refineries, 26 USC 179(B). Taxpayers should not subsidize through this special deduction for certain oil refineries related to cost of compliance with EPA low-sulfur pollution rules.
- Eliminate environmental remediation expense deduction, 26 USC 198 – prevents oil/gas industry from taking deduction for certain environmental clean-up costs.
- Eliminate intangible drilling oil and gas deduction, 26 USC 263. This provision allows oil and gas companies to immediately deduct the cost of things like wages and supplies, lowering their taxes, instead of normal process of deducting these costs over time.
- Eliminate marginal wells production credit 5 year carryback 26 USC 39(a)(3), which allows 5 year carryback for marginal wells production credit.
- Eliminate oil and gas Arbitrage bonds exemption 26 USC 148(b)(4).
- Eliminate alternative fuel credit for natural gas 26 USC 30C(c) Currently natural gas qualifies as an alternative fuel eligible for a tax credit, this provision would remove the credit for natural gas.
- Eliminate 7 year amortization, 26 USC 167(h), this tax break created in 2005 to allow certain oil and gas corporations to more quickly amortize incidental drilling costs, reducing taxes paid. This proposal would eliminate the current 2 year amortization and extend it to 7 years.
- Return to natural gas gathering lines 15 year property depreciation, 26 USC 168(e)(3). This eliminates special provision allowing for 7 year depreciation for natural gas pipelines, returning to the standard 15 year depreciation.
- Increase Oil Spill Liability Trust Fund Financing, 26 USC 4611(c)(2), and Apply Oil Spill taxes to tar sands oil, 26 USC 4612(a). This proposal would institute a 1 penny per barrel increase in the tax that funds the oil spill liability trust fund, in response to BP oil spill in Gulf demonstrating the increased need for oil spill funding, and also would extend this tax to tar sands oils which are currently exempt from it.
- Deny tax deduction for oil spill costs, Part IX, subchapter B chapter 1 IRC. BP was able to deduct from its tax liability billions of dollars for certain costs related to remediation from the Gulf oil spill. This provision would ensure that corporations responsible for oil spill cleanup and damages do not get a tax break for paying to cleanup their messes.
- Recover lost royalties on offshore drilling through excise tax. In the 1990’s certain offshore leases were provided without requiring royalty payments from industry, as a means of encouraging drilling when prices were very low. These leases did not have a provision to institute royalties when prices moved higher, causing a significant loss of tens of billions to the taxpayer over the life of leases. This excise tax of 13 percent would ensure that corporations not already paying royalties pay their fair share.
- Terminate the use of last in, first out (LIFO) accounting for fossil fuel companies, 26 USC Section 472 and 473. This provision allows oil and gas companies to minimize the value of their inventories for tax purposes providing a significant tax benefit for oil companies, especially when prices are rising. LIFO allows oil companies to calculate profits based on the cost of the oil they most recently added to their inventory. Since the most recently acquired inventory costs the most when prices are rising, this method can minimize a company’s taxable income. LIFO is available to businesses in other industries but large oil companies are perhaps the biggest beneficiaries.
- Eliminate the Dual Taxpayer Deduction, 26 USC 901. The U.S. Chamber of Commerce says “nearly all” dual capacity taxpayers are oil and gas corporations but this deduction allows oil and gas companies that operate overseas to classify royalty payments to foreign governments as taxes, thereby reducing their U.S. taxes because foreign taxes, unlike royalty payments, are fully deductible.
- Eliminate mining exploration deduction, 26 USC 617, which allows coal mining companies to deduct certain exploration and development costs.
- Eliminate mining and solid waste costs 26 USC 468, which provides a tax deduction for certain costs related to mining and waste site reclamation and closure.
- Eliminate credit for carbon dioxide sequestration 26 USC 45Q, which provides tax credit of between $10 and $20 per metric ton of carbon sequestered by industrial facilities such as coal plants.
- Eliminate advanced coal credits 26 USC 48A and 48B, which are tax credits provided for construction of advanced coal plants.
- Repeal domestic manufacturing deduction for mining, 26 USC 199(c)(4). This provision, from a 2004 law, allows coal industry to claim it is a ‘manufacturer’ and claim deductions aimed at incentivizing American manufacturing.
- Terminate the capital gains treatment for royalties from coal, 26 USC 631. This provision was enacted in 1951, and allows coal companies to treat income from coal mines as a capital gain, taxed at 15 percent maximum, instead of regular income which could be taxed at a much higher rate.
- Designate Powder River Basin a “coal-producing region” and require the Bureau of Land Management (BLM) to designate Powder River Basin a “coal-producing region” giving federal government more impetus and authority to get a fair return on leases, and not to simply provided leases based on industry needs.
- Conduct a fair market value study for the Powder River Basin, and require the BLM to do a fair market value study of Powder River Basin to determine if taxpayers are getting a fair return for leases.
- Repeal percentage depletion for coal 26 USC 613, which allows coal companies to deduct 10 percent of their sales revenue to reflect declining value of their investment, regardless of actual value of their investment.
- Eliminate the Department of Energy (DOE) loan guarantees for advanced coal projects, 42 USC 16513, which provides billions of dollars in loan guarantees.
- Eliminate nonconventional fuel credit, 26 USC 45K, which provides a tax credit for nonconventional fuels including produced from coal and other fossil fuels.
- Increase onshore public lands royalty rate to 18.75 percent, 30 USC 207, 223, 226, which would bring onshore public lands royalty rates in line with offshore royalty rates.
- End funding for World Bank Financing would rescind existing funding, and impose a future prohibition, on using U.S. taxpayer funds to finance fossil fuel projects through the World Bank. In 2010 the World Bank provided $4.4 billion for coal financing.
- Terminate the Department of Energy (DOE) office of fossil energy R&D, 42 USC 7133. Taxpayers should not fund research and development programs for the fossil fuel industry.
- End ARPA-E funding for fossil fuels, thereby eliminating another taxpayer-backed research and development programs for fossil fuel industry.
- Eliminate USDA loans or guarantees for coal, oil, or gas, 7 USC 931, ending USDA loans or loan guarantees for coal plants, as well as other fossil fuel plants or projects.
- Rescind existing funds, and impose a future prohibition, on using U.S. taxpayer funds to finance fossil fuel projects through OPIC and Export- Import Bank. In 2011 the Export-Import Bank helped to finance nearly $5 billion in oil and gas industry projects, and hundreds of millions for coal-related projects.
- End all federal transportation funding for coal, oil, or gas rail or port projects. We must prohibit federal transportation funds for rail or port projects designed to transport and/or export fossil fuels.
- Eliminate Master Limited Partnerships for oil and gas and coal companies, 26 USC 7704(d)(1)(E), eliminating special partnership option for fossil fuel corporations and investors.
- Require the Treasury Department to identify any additional energy production subsidies and issue a report to Congress quantifying their cost to the taxpayer so that they can be eliminated.
What’s missing? Send your additions to email@example.com.