President Obama winked and nodded his intention Wednesday to close tax loopholes in exchange for lower tax rates. It was just for show. One day later, the commander in chief flew Air Force One to Florida to reiterate his support for expanding tax carve-outs for his political allies.
To pull this off, the president needs to paint Big Oil as the bad guy responsible for gasoline soaring to an average $3.61 per gallon. “A century of subsidies to the oil companies is long enough,” Mr. Obama told students at the University of Miami. That gives him an excuse to reward his friends who have invested heavily in windmills and sun power as an alternative to more efficient fossil fuels. “It’s time to end taxpayer giveaways to an industry that has never been more profitable, double down on clean-energy industries that have never been more promising.”
Republicans on the tax-writing House Ways and Means Committee aren’t impressed with the corporate tax reform plan released by White House Wednesday. “While some of the president’s proposal moves in the right direction, perverting the tax code further with more loopholes to help allies - picking more political winners and losers - won’t help our economy a bit,” Rep. Peter Roskam, the chief deputy whip, told The Washington Times.
Mr. Obama proposes to end the oil and gas industry’s ability to expense drilling costs. Sticking it to oil and gas companies appeals to his liberal base, but this tax change would only generate $4 billion, barely enough revenue to cover 30 minutes of federal spending. Closing this “loophole” and not others would just raise the price of gas and put countless Americans out of work.
The Obama administration’s alternative is nothing more than a giveaway to his union allies at Government Motors. He has already blown as much as $5 billion in taxpayer money to subsidize manufacturing of pointless electric cars, yet nobody is buying these overpriced golf carts. So the president stated in his budget that he wants to reward the wealthy liberals who buy a Chevy Volt with a $10,000 tax credit - up from $7,500. Only 20 percent of likely voters favor the 10-grand government subsidy to encourage purchasing plug-in cars, according to a recent Rasmussen Reports poll.
Congress should flat-out refuse to create these new tax preferences. Instead, lawmakers should work on slashing all carve-outs across the board. As Mr. Roskam put it, “We need comprehensive tax reform that lowers the business rate significantly, in exchange for removing special preferences. That would kick-start our economy and make American companies much more competitive.” Rewarding the successors of the failed solar-panel manufacturer Solyndra while punishing oil companies is a recipe for driving gas prices well beyond $6 a gallon all over the United States by Election Day.
Emily Miller is a senior editor for the Opinion pages at The Washington Times.