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The $2-trillion infrastructure and tax plan of U.S. President Joe Biden proposes to eliminate tax preferences and implicit subsidies for fossil fuels that would boost government receipts by more than $35 billion over the next decade, the U.S. Treasury said in the Made in America Tax Plan Report this week.
President Biden’s plan on fixing the nation’s infrastructure unveiled last week proposes to “eliminate tax preferences for fossil fuels and make sure polluting industries pay for environmental clean up.”
The President would like to see the package – which also includes a proposal to raise the corporate tax to 28 percent – passed by the summer, White House Press Secretary Jen Psaki said earlier this week.
The plan will likely face opposition not only from Republican, but also Democratic lawmakers, while the oil industry has already made clear it wants a level playing field for all economic sectors.
In the report on the tax plan, the Treasury said its estimates “suggest that eliminating the subsidies for fossil fuel companies would increase government tax receipts by over $35 billion in the coming decade. The main impact would be on oil and gas company profits. Research suggests little impact on gasoline or energy prices for U.S. consumers and little impact on our energy security.”
Tax preferences for oil, gas, and coal producers undermine the fight against climate change, the Treasury said.
“Recent research shows how the benefits of these implicit subsidies are concentrated within a handful of large firms,” says the report, referencing research led by Matthew Kotchen of the Yale University and the National Bureau of Economic Research.
The research, published in Proceedings of the National Academy of Sciences, found that EQT Corporation, Exxon, BP, Chesapeake Energy, and Chevron were the top beneficiaries of implicit subsidies in 2018.
Commenting on President Biden’s plan, Frank Macchiarola, Senior Vice President for Policy, Economic and Regulatory Affairs at the American Petroleum Institute, said last week:
“Targeting specific industries with new taxes would only undermine the nation’s economic recovery and jeopardize good-paying jobs, including union jobs. It’s important to note that our industry receives no special tax treatment, and we will continue to advocate for a tax code that supports a level playing field for all economic sectors along with policies that sustain and grow the billions of dollars in government revenue that we help generate.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.