Why? Because the same approach “failed miserably” in the 80s, according to new House Majority Leader, John Boehner.
Well John, not that this is a good argument, but you think maybe that things have changed in 20 years? After all, even after the elder Bush dismantled Reagan’s supply side economic model because it drove the country into a significant recession, current Republican leaders revisited the same strategy nearly a decade and a half later.
More from the Wash Post:
While Republican leaders sharply criticize soaring gasoline prices and energy industry profits, GOP negotiators have decided to knock out provisions in a major tax bill that would force the oil companies to pay billions of dollars more in taxes on their profits.
House and Senate tax writers have been struggling to reach an accord on separate tax bills approved last year to extend some expiring tax cuts enacted during President Bush’s first term. But House Republicans have raised strong objections to Senate-passed provisions that would raise nearly $5 billion in taxes over five years — primarily by changing arcane accounting rules that have allowed oil companies to substantially lower their tax bills, according to House and Senate tax aides familiar with the talks.
I love that word “arcane.” You know what that’s code for? Loophole.
Here’s Boehner in his own words…
“The windfall profits [tax], when it was tried in the ’80s, failed miserably because it led to less discovery. It led to less production and was a failure,” Boehner said. “There is no reason for us . . . to go there again.”
Hmm, what do you think Bush?
Even Bush called on Congress yesterday to temper one small provision in last year’s energy bill that offered oil companies a quick tax write-off of the costs of oil exploration.
“Record oil prices and large cash flows also mean that Congress has got to understand that these energy companies don’t need unnecessary tax breaks like the write-offs of certain geological and geophysical expenditures,” he said .
And here are some explanations of how the oil companies fudge on their taxes and the proposals to stop this behavior…
The biggest of the provisions would change accounting rules that apply to oil in storage. Currently, oil companies are allowed to calculate the taxable value of their inventories based on the value of the oldest stocks, when oil may have been worth $30 a barrel. But much of the inventory may have been pumped from the ground when oil was selling for more than double that. Critics say that understates the value of the companies’ oil supplies purely to lower their tax payments.
Another would prevent oil companies from deducting from their U.S. taxes the royalties paid to foreign governments.
The third, which would repeal the provision in last year’s energy law allowing companies to write off in two years the cost of geological exploration, received new life after Bush’s speech, Senate tax aides said.
But Bush’s gesture? The tax change for exploration? It looks like, again, it’s pretty much just a move that signifies nothing. I mean, how many moves of this type would the American Petroleum Institute support?
The Senate had hoped to repeal the quick write-off of exploration costs, but Bush merely wants to stretch it out from two years to five years, as proposed in his February budget plan, according to Mark Kibbe, senior tax policy analyst with the American Petroleum Institute.
“We would not necessarily be opposed to that at all,” Kibbe said.
Oh well…I’m sure we’ll hear more about this…