By Ben Geman - 10/05/12 09:30 PM EDT
ExxonMobil is returning fire after President Obama singled out the oil giant in Wednesday’s debate when calling for an end to billions of dollars in industry tax breaks.
“To hear President Barack Obama in last night’s first presidential debate, you would think he was running against ExxonMobil this November given his tendency to single us out for criticism,” wrote Ken Cohen, an Exxon executive, on the company’s blog Thursday.
He cited other instances in which Obama has cited Exxon, the world’s largest publicly traded oil company, when touting proposals to raise taxes on an industry that the president says does not need the incentives.
“Because we’ve been pulled into this debate, I feel like asking the moderator to let me respond with several points,” said Cohen, the company’s vice president of public and government affairs.
“The oil industry gets $4 billion a year in corporate welfare,” Obama said. “Now, does anybody think that ExxonMobil needs some extra money when they're making money every time you go to the pump? Why wouldn't we want to eliminate that?”
Cohen’s post in defense of the industry’s tax incentives calls the “corporate welfare” claim inaccurate, and argues in favor of the oil industry’s ability to claim a lucrative deduction, the so-called Section 199 deduction, on domestic manufacturing income.
Cohen noted it’s among the benefits available to “virtually all” manufacturers and producers, and that the deduction for oil producers is smaller than what’s available to other industries. The 2008 Wall Street bailout bill capped the industry’s deduction at a lower level.
“Keep in mind, too, that ExxonMobil’s U.S. tax expense amounts to more than $1 billion per month. In 2011, our total U.S. taxes of $12.3 billion exceeded our U.S. earnings by almost $3 billion, and our effective income tax rate in the U.S. was 31.4 percent — far higher than many critics have claimed,” Cohen writes.
While Exxon returned fire at Obama, it was Romney who drew attention Wednesday when he said that oil industry tax breaks are “probably not going to survive” if the GOP nominee is able to reduce the overall corporate tax rate from 35 percent to 25 percent.
Romney cited roughly $2.8 billion in annual benefits that would be “on the table” for removal.
The GOP nominee's campaign noted that the figure stems from a 2011 Energy Information Administration report that tallied tax breaks and other federal aid to energy producers and consumers in fiscal 2010.
That figure does not include the Section 199 deduction.
The White House and Democrats have floated a number of plans to strip industry incentives. While some proposals would only target major integrated companies like Exxon, Chevron and Shell, the White House wants to raise roughly $40 billion over 10 years with a plan that would hit both “Big Oil” and, in some cases, independent producers.
The White House plan would repeal the so-called percentage depletion allowance, which isn’t available to the big integrated companies, as well as repeal expensing of “intangible” drilling costs, which is fully available to independent companies and partially for the others.
“Oil and gas subsidies are costly to the American taxpayer and do little
to incentivize production or reduce energy prices,” the fiscal 2013
White House budget plan states.