Post date: May 12, 2011 6:19:15 PM
Lawkmakers grill top executives from the five biggest oil companies over tax breaks amid huge profits as the U.S. government aims to ease a massive federal budget deficit.
WASHINGTON, D.C., UNTIED STATES (MAY 12, 2011) POOL - The world's largest oil companies on Thursday (May 12) fought back against Democratic plans to pare back some of their cherished U.S. tax breaks, saying the measure was un-American and discriminatory and would only escalate already high gasoline prices.
Top executives from the five biggest oil companies, BP, Exxon Mobile, ConocoPhillips, Royal Dutch Shell and Chevron testified about the tax breaks before the Senate Finance Committee. Democrats say dropping subsidies to the big five oil companies would help cut the massive U.S. deficit by about $21 billion over a decade.With gasoline prices soaring towards $4 a gallon, Democrats hope to claw back $2 billion a year in breaks. The companies made about $35 billion in profits after posting double digit growth in the first quarter as energy prices soared.
High gasoline prices are increasingly a big headache for President Barack Obama as the Democrat gears up for next year's presidential run.
The executives contend their corporations already pay high taxes and ending their incentives would only drive them them to look for oil abroad, costing American jobs, which would eventually raise oil prices and fuel prices in turn, they argued.
West Virginia Senator John Rockefeller told the executives "I don't think you have any idea of what the size of your profits does to the American people's willingness to accept what you have to say, which is basically anything you do to increase our cost is going to force us to go over seas which I don't accept."
John Watson, the CEO of Chevron told the Senate panel "Singling out five oil companies because if their size is even more troubling, such measures are anti-competitive and discriminatory."
James Mulva, the CEO of ConocoPhillips, said his company pays its fair share of taxes. "We earned 11.4 billion dollars last year and we paid 8.3 billion in income taxes as well as 3.1 billion in other taxes, so our total world-wide taxes paid actually equaled our income. So any fair-minded person would likely agree that we pay our fair share."
The Center for American Progress, a liberal think tank, said in a analysis this week that Exxon's federal tax rate last year was 17.2 percent after all the tax breaks and concessions were accounted for, lower than what the average American pays.
Charles Schumer, the Democratic Senator from New York, pressed Mulva "Do you think your subsidy is more important than the financial aid we give students to go to college?"
Mulva responded "Well Senator, that's a choice that legislatively you're going to have to be making. For our company, what we are tasked with is to provide energy in an affordable way for the American public."
Schumer snapped back "So you would choose the oil subsidy over the aid to students? That's what you're telling me."
Senate Majority Leader Harry Reid said he wants to bring a bill to the floor next week to repeal oil industry tax breaks, to help ease the deficit by about $21 billion over 10 years. The call for repealing the tax breaks among Democrats in the Senate has grown louder as the price of crude oil remains near $100 a barrel.
The bill's backers face a hurdle getting the 60 votes needed for passage in the 100-member Senate because of staunch opposition from Republicans and some Democrats from oil-producing states.
But getting Republicans to go on record as supporting Big Oil could be an arrow for Democrats to use in the election campaigns if prices keep rising.