Tax Cuts on Valero Energy

Tax Cuts Affects

If the government imposed tax cuts for 95% of all households, it would not affect Valero Energy. According to an article Andy Kroll, a drastic cut in taxes for a company the size of Valero will have little impact because of the many tax breaks set in place from a century ago that have been extended past the need. A few of the tax cuts put in place are writing off drilling expenses for “intangible costs,” depletion allowance in case the oil well went dry early, and domestic manufacturing deduction to keep the stateside drilling from being “outsourced.” (Kroll, 2014) These were all very valid tax exemptions a century ago, but only an excuse for big oil to keep tax rates to a minimum in the 21st century. In an article on USNews.com, it was revealed that some smaller independent oil and gas companies deferred almost all of the federal income taxes accrued during the five years prior to the article in Aug of 2014. These companies reported an average current tax rate of just 3.7 percent (Alexander, 2014)

The fact that the oil industry can have taxpayers pay the oil and gas industry over $470 Billion in “never expiring” tax breaks is something that should be updated. The oil industry is not the dangerous, and unpredictable business it once was. Technology has brought the oil industry into modern day and the tax code needs to catch up so our taxpayers aren’t left footing the bill.

Bail Out Affects

It is no secret a few years ago our country had some major government spending in the form of a “bail out” of several large businesses facing bankruptcy. The “bail out” effected the economy in many ways; some were directly impacted like the housing market while others were indirectly impacted like the oil industry. In an interesting investor editorial, Bret Boteler explains how oil prices vary greatly from other key economic indicators like employment statistics, GDP, consumer sentiment, and the course of the stock market. With the slight exception of the stock market, which factors in economic declines ahead of time and stock prices trade accordingly, most economic benchmarks are lagging indicators that signal events that have already occurred, not new ones that might occur. Boteler goes