CAP tries to renew a bill of attainder against big oil companies

Oil tanks by Shutterstock

Almost two years ago, we warned against ongoing efforts to undermine the rule of law by singling out unpopular taxpayers for disadvantageous tax rules that don’t apply to anyone else. Recent efforts have targeted five companies – BP, Chevron, ConocoPhillips, ExxonMobil, and Shell – for special tax increases that would apply to no other companies. Congress adopted a rule in 2006, which it tightened in 2007, slowing down write-offs for geological and geophysical expenditures for only the five companies. Bills that would have imposed additional tax increases on the five companies, and only on them, received majority support in the Senate on May 17, 2011 and again on March 29, 2012, although neither bill reached the 60 votes needed to become law.

Apparently, no bad idea ever dies. Last week, Daniel Weiss of the Center for American Progress called for revival of those Senate proposals. His arguments are little different from those made then: Weiss opines that the five targeted companies “can prosper” even if they are singled out for these tax increases and asserts that “they can afford it.” Probably so, but that’s not the issue. A free society must tax all companies and individuals in accordance with the rule of law. It cannot single out unpopular companies for special taxes, even if the taxes are limited to amounts that the targets “can afford” or that still allow them to prosper.

The most egregious targeting concerns the Section 199 domestic-production deduction, which applies to businesses that produce goods (though not those that produce services), except producers of adult movies. Weiss would deny the deduction to the five companies, putting their oil in the same category as adult movies, while leaving the deduction fully intact for every one of the hundreds of thousands of other businesses, including other oil producers, who claim it.

Weiss argues that money taken from the five companies can be used to provide food stamps to working families, veterans, and children. Of course, money seized from unpopular taxpayers can be spent on good things. But so can revenue collected from the general public through neutral tax rules. If additional food-stamp funding is needed, that’s the way to pay for it.

Like, say, the power to close bridges, the power to tax should never be abused for political ends. It is tempting to dismiss a proposal that affects only five unpopular companies as harmless or unimportant. By its nature, though, the rule of law cannot be selectively applied. If it is to protect any of us, it must protect all of us, including BP, Chevron, ConocoPhillips, ExxonMobil, and Shell.

— Kevin Hassett is director of economic-policy studies and Alan D. Viard is a resident scholar at the American Enterprise Institute.

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About the Author

 

Kevin A.
Hassett
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.



    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

  • Phone: 202-862-7157
    Email: khassett@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202-862-5862
    Email: emma.bennett@aei.org

 

Alan D.
Viard
  • Alan D. Viard is a resident scholar at the American Enterprise Institute (AEI), where he studies federal tax and budget policy.

    Prior to joining AEI, Viard was a senior economist at the Federal Reserve Bank of Dallas and an assistant professor of economics at Ohio State University. He has also been a visiting scholar at the US Department of the Treasury's Office of Tax Analysis, a senior economist at the White House's Council of Economic Advisers, and a staff economist at the Joint Committee on Taxation of the US Congress. While at AEI, Viard has also taught public finance at Georgetown University’s Public Policy Institute. Earlier in his career, Viard spent time in Japan as a visiting scholar at Osaka University’s Institute of Social and Economic Research.

    A prolific writer, Viard is a frequent contributor to AEI’s “On the Margin” column in Tax Notes and was nominated for Tax Notes’s 2009 Tax Person of the Year. He has also testified before Congress, and his work has been featured in a wide range of publications, including Room for Debate in The New York Times, TheAtlantic.com, Bloomberg, NPR’s Planet Money, and The Hill. Viard is the coauthor of “Progressive Consumption Taxation: The X Tax Revisited” (2012) and “The Real Tax Burden: Beyond Dollars and Cents” (2011), and the editor of “Tax Policy Lessons from the 2000s” (2009).

    Viard received his Ph.D. in economics from Harvard University and a B.A. in economics from Yale University. He also completed the first year of the J.D. program at the University of Chicago Law School, where he qualified for law review and was awarded the Joseph Henry Beale prize for legal research and writing.
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    Email: aviard@aei.org
  • Assistant Info

    Name: Regan Kuchan
    Phone: 202-862-5903
    Email: regan.kuchan@aei.org

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