Well, Hugo’s Happy

By February 28, 2008Energy, Taxation

From CQ Politics, a story on passage of H.R. 5351, the $18 billion tax increase on oil and natural gas producers.

Meanwhile, Citgo Petroleum Corp. would continue to receive a 6 percent deduction for domestic manufacturing that the largest firms would lose.

Citgo, which refines oil and markets and transports gasoline in the United States, is owned by a subsidiary of the government-owned Petróleos de Venezuela, S.A., or PDVSA. Because Citgo does not drill for oil and gas domestically or abroad, it does not fall under the bill’s definition of companies that will lose a major tax break.

The five big companies targeted by the bill — Chevron, BP, ExxonMobil, Shell and ConocoPhillips — all produce and refine oil and sell gasoline in the United States, and therefore under the bill would lose the domestic manufacturing deduction they received as part of a corporate tax law in 2004 (PL 108-357).

¿Cómo se dice “perverse incentive” en español?

Although our first instinct was to think that the Citgo-Joe Kennedy propaganda campaign really did pay off, it’s more likely that this is just what happens when politicians pick winners and losers in the marketplace.

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