Whaaaa, don't take my tax break away
In another effort to stave off critics who call a $1 billion annual tax break for high-cost gas producers in Texas outrageous, a study paid for by the industry has emerged intended to scare folks into believing that for every $1 the state spends in tax breaks it gets back about $4 in related economic activity and that will disappear if we take their tax break away.
Former Deputy State Comptroller and current lobbyist Billy Hamilton has produced an industry-backed study for the American Natural Gas Alliance on what they claim the impact of the withdrawal of the tax incentive would have on Texas. The industry is rightly concerned that the tax break would come under attack as the state tries to close a $27 billion budget gap.
Hamilton’s analysis concludes that ending the tax break would result in an immediate loss in 2012 of 35,000 and $3.8 billion in economic output, estimating Texas would lose 94,400 jobs each year and $10.4 billion each year in economic output.
The industry has been saying for some time that if Texas dumps this tax break, states like Pennsylvania will get the driller’s business, but Texas has the largest reserve of natural gas in the nation and it is hard to believe the industry would pull up stakes to move elsewhere. It is not like they aren’t making plenty of money here in Texas. And the state hasn’t seemed concerned that they are losing renewable energy manufacturing jobs by not providing that industry with tax breaks/incentives, so no sympathy here.
Worthy of discussion here is exactly who is getting these state tax cuts, and according to the Houston Chronicle, it’s mostly companies from out of state.
Not surprisingly, the top five firms that saved the most as a result of the exemption represent the largest oil and gas producers in Texas:
Oklahoma-based Devon Energy, saved $113.8 million in fiscal year 2010 under the exemption. Devon reported net earnings last year of $4.6 billion.
Next on the list was XTO Energy Inc., a subsidiary of Exxon, which saved $113.2 million on its “high cost” gas operations in Texas. XTO reported $2 billion in net earnings last year. Others who received top financial benefits were: Canadian-based EnCana, which saved $60.6 million, Oklahoma-based Chesapeake Energy, which saved $59.4 million and Enron spin-off EOG Resources of Houston, with $58.6 million in savings.
These tax breaks really amount to little more than subsidies of some of the most profitable companies around. It would be one thing if these were Texas companies, but when Texas taxpayers are subsidizing Oklahoma and Canadian companies, something is very, very wrong. We can expect the corporate welfare queens to cry when their gravy train is threatened, but their protected status at the Legislature, thanks to millions in campaign contributions to Texas politicians, insures that they won’t actually be in danger of cuts. Not like our schools, or grandma’s nursing home. Perhaps if our teachers and the elderly were represented by out of state special interests who can dip into their huge profits to bribe donate to politicians, they could be safe from cuts, too.
If, in fact, there are no sacred cows as the legislature tries to deal with the budget deficit, then this tax break needs to be on the table too.