TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, February 28, 2014

The Fossil Fuel Tax Deception

32Tax panel at today's 2014 Public Interest Environmental Law Conference at Oregon:

Fossil Fuel Deception: The Federal Government’s Participation Through Financial Incentives (Organizer: Mona L. Hymel (Arizona))
The deception of oil causes us to think that we can buy cheap stuff from China, we can live in cheap big houses in the exurbs, and we can keep on driving to CostCo in our SUVs to stock up on that cheap stuff from around the world. Is our economy hostage to cheap oil? Our thirst for oil leads to exploitation of pristine lands and exploitation of native people. Concern about oil justifies military buildup. From a tax perspective, “regular” oil tax benefits like percentage depletion, enhanced oil recovery, and IDCs, while relatively minor in terms of total tax expenditures, never expire and illustrate the strength of the fossil fuel lobby, which resists any cut backs. There are also stealth oil benefits: exemption from AMT and passive activity loss rules, the § 199 deduction, and master limited partnerships. Unconventional oil and gas extraction techniques (fracking and tar sands) reduce the net energy benefit of oil. Energy from oil could be used to transition into a fossil-free economy, but we just seem to keep burning it. A carbon tax could help reduce the incentive to keep drilling and digging ourselves even deeper in the climate change hole.

  • Greg Bothun (Oregon) 
  • Neil Buchanan (George Washington)
  • Mona Hymel (Arizona)
  • Roberta Mann (Oregon)
  • Tracey Roberts (Seattle)
  • Walter Wang (San Diego)

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