Zeev's Turnips Talk Politics (ZTTP)

[StephanieVanbryce]

Tax Breaks Benefiting Energy Companies in the Corporate Tax Bill, HR 4520
Signed Into Law October 2004

Power, Natural Gas, and Oil Producers Now Qualify For Manufacturing Tax Deduction
Title I, Section 102

Total Cost of Tax Break: $76.5 billion from 2005-2014

In this provision, America’s largest energy companies—among the most profitable in the U.S. economy—would succeed in reclassifying energy production as a manufactured good in order to qualify for potentially tens of billions of dollars in new tax deductions. The manufacturing tax deduction has previously only been available to traditional manufacturing industries. The amount of the tax deduction is 3% of a company’s production income in 2005 and 2006; rising to 6% in 2007-2009, and 9% after 2009.

The total cost of this tax deduction, $76.5 billion from 2005-2014, includes the value of the tax deduction for energy companies and other industries, including movie studios, real estate developers and engineering and architectural services associated with real estate development. It is a safe assumption that energy companies—due to their size within the U.S. economy—will be the largest recipient.

Since 2001, electric power, natural gas and oil corporations have contributed $73 million to federal candidates, with three-quarters of that total going to Republicans.


Tax Break for 3 Oil Companies to Build an Alaskan Natural Gas Pipeline
Title VII, Section 706

Cost to Taxpayers: $150 million

AND

Oil Company Tax Break
Title VII, Section 707

Cost to Taxpayers: $295 million

Three companies—BP, ExxonMobil and ConocoPhillips—stand to be the primary recipients of these two tax breaks, totaling $445 million, for building an Alaskan natural gas pipeline and for processing natural gas for the project. Considering that these three companies have enjoyed after-tax profits of $95 billion since 2001, the wealthy shareholders of these companies—not taxpayers—should foot this bill.

Section 706 will allow the three oil companies to depreciate their natural gas pipeline over seven years, costing taxpayers $150 million. Section 707 gives allows natural gas companies in Alaska with a natural gas processing plant to claim a 15% oil recovery costs tax credit, costing taxpayers an additional $295 million.

These three companies combined have contributed over $3 million to federal candidates since 2001, with 85% of that total going to Republicans.


Tax Breaks for Oil Refiners
Title III, Subtitle C, Sections 328-329

Cost to Taxpayers: $119 million

This tax break begins with a reasonable premise: provide tax breaks to oil refineries to improve clean air standards. The problem is that the statue defines “small refiners” as those with refining capacity below 205,000 barrels/ per day—a high threshold that will include some large oil companies that have enjoyed huge profits. A better threshold would be restricting the tax break to those refiners with capacity below 100,000 barrels/ per day.

Following is the list of companies that appear to qualify for this tax break as it is now written: Chalmette Refining, TotalFinaElf, Crown Central-La Gloria Oil & Gas, Sinclair Oil-Little America Refining, Frontier Oil, Cenex Harvest States Corp, Murphy Oil, Farmland Industries, Ergon-Lion Oil, Giant Indus, Holly Corp-Navajo Refining-Montana Refining, Calumet, United Refining, Suncor Energy, Petro Star, Alon USA Energy, Gary Williams, Paramount Acquisition Corp, Placid Refining, Time Oil-U.S. Oil & Refining Co, Hunt, Transworld Oil USA, Apex Oil, Kern Oil, San Joaquin Refining, Countrymark Cooperative, Southland Oil, El Paso Corp-Coastal, Silver Eagle Refining, Wyoming Refining, Age Refining, American Refining Group, Greka Energy, World Oil, Cross Oil, Somerset Refinery, Young Refining, Foreland Refining, Oil Holding Inc, and Dow Chemical.

Section 328 would allow qualifying refiners to deduct 75% of the costs associated with complying with the EPA’s Highway Diesel Fuel Sulfur Control Requirements. Section 329 provides a 5¢/gallon of low sulfur diesel fuel produced by the refiner.


Tax Break for Sale of Electricity Transmission Assets
Title VIII, Subtitle D, Section 909

Total Cost to Taxpayers: $5 billion in 2005-2006. In the following years, this provision will raise revenue, eventually breaking even after seven years.

The Federal Energy Regulatory Commission has stumbled in its attempts to force power utilities to join its anti-consumer Regional Transmission Organization (RTO) electricity market system. So this tax break appears to serve as an end-around: Utilities will be enticed to sell their transmission assets into these systems with $5 billion in tax breaks in the first two years. RTOs are Enron’s dream come true: huge, multi-state electricity systems that prioritize the needs of energy traders like Goldman Sachs and other power marketers at the expense of consumers.

Electricity companies have contributed over $31 million to federal candidates since 2001, with two-thirds of that total going to Republicans.


Government Subsidizies for SUVs Reduced
Title II, Subtitle A, Section 201

Cost to Taxpayers: $1.26 billion over 10 years

The bill reduces a $100,000 tax deduction to $25,000 for small business owners who purchase SUVs or other light trucks over 6,000 pounds. The $100,000 tax break made the purchase of at least 55 models of large SUVs, passenger vans, and trucks completely deductible in the first year - only the Hummer H1 exceeded the deduction cap.


Suspension of Duties on Nuclear Steam Generators and Reactor Vessel Heads
Title VII, Section 715

Cost to Taxpayers: $9 million

This section would suspend the import duties on nuclear steam generators and reactor vessel heads – components that are being replaced in power plants around the country – for another two years, costing taxpayers $9 million. Replacing these components means that the reactors will continue to be used – and to generate dangerous waste – long past their intended lifetimes.


Electricity Tax Credit
Title VII, Section 711

Cost to Taxpayers: $2.278 billion from 2005-2014

This is a tax credit for generating electricity from alternative fuel sources, although only onewindis a clean renewable energy source. The rest of the expensive credit is doled out to companies that pollute. For example, companies that burn municipal solid waste will get the credit, along with companies that burn chicken waste and certain types of "refined" dirty coal.

Language slipped in during the conference committee narrowly defining "refined" coal qualifying facilities appears to largely benefit one company: Denver-based KFx. The company employs a technology, K-Fuel, that reduces mercury emissions from certain types of coal, and just recently announced plans for several facilities that appear to meet the specific terms required to qualify for the credit.

Executives and board members of the company have engaged in an aggressive campaign to contribute to politicians in recent years, and hired two lobbying firms beginning in 2003 to get the language inserted during the conference committee.

Since 2001, KFx executives have contributed $38,750 to candidates for federal office, with 82% of that amount going to Republicans. Key recipients included Senate conferee Max Baucus ($3,000) and the National Republican Senatorial Committee ($20,000).

Five members of the company's Board of Directors (Stanley G. Tate, Mark S. Sexton, Stanford M. Adelstein, James S. Pignatelli and James R. Schlesinger) contributed an additional $190,000 over that same time period, with 93% of their total going to Republicans. Key recipients include President Bush ($14,000), the National Republican Senatorial Committee ($34,360), the Republican National Committee ($31,950), the National Republican Congressional Committee ($2,300), and Senate conferees Chuck Grassley ($1,250), Mitch McConnell ($1,500) and Baucus ($500).

Beginning in 2003, KFx hired two lobbyists - John "Brad" Holsclaw with Tongour, Simpson Holsclaw & Lytle and Cathy Abernathy Consultants - for at least $220,000 to lobby Congress to insert the language benefitting the company.


Tax Break for Real Estate Development Projects
Title VII, Section 701

Cost to Taxpayers: $231 million from 2005-2014

This provision grants federally-guaranteed bonds to five real estate developments that, according to the legislation, are classified for various reasons as “green” building projects. Only four companies will benefit from this $231 million subsidy:

“DestiNY USA” Entertainment/Retail Center. A $2.2 billion complex—which would reportedly be the nation’s largest mall—to be built near Onondaga Lake in Syracuse, New York. For more information about the Bush Pioneer developing the DestiNY project, see http://www.whitehouseforsale.org/documents/EnergyBillBooty.pdf.


“Louisiana Riverwalk.” A $180 million urban renewal project to redevelop a former industrial site along the Red River in Shreveport-Bossier City, Louisiana.


“Atlantic Station” Residential/Commercial Project. A $2 billion development to be built on the site of a former steel mill in Atlanta, Georgia.


“BelMar” Development Project. A $750 million housing and commercial project designed to create a “downtown” for Lakewood, Colorado, a Denver suburb.

Combined, these companies, their executives and lobbyists have contributed $600,000 to politicians over the last election cycle in order to help secure federal subsidies for their projects.


Home Depot Gets its Ceiling Fan Subsidy
Title VII, Section 714
Cost to Taxpayers: $44 million in just three years

This provision rescinds a tariff on ceiling fans imported from China, a gift to giant retailer Home Depot, which had lobbied specifically for the measure. The company stands to gain up to $44 million from the tariff relief in the next 3 years—the estimated drain from the U.S. Treasury as calculated by the Joint Committee on Taxation. In addition to $20,000 spent lobbying for the tariff exemption, Home Depot has given over $1.8 million to Congress since 1999, 82% of which went to Republicans. Moreover, Home Depot Chief Executive Officer Robert Nardelli is no stranger to the President: he has made no fewer than three trips to the White House during the Bush administration, and he appeared alongside Bush in December as the President made a speech on the economy to workers at a Home Depot in Maryland.

(updated on October 29, 2004)

http://www.citizen.org/cmep/energy_enviro_nuclear/electricity/energybill/articles.cfm?ID=12395