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A recent analysis (funded by Rockefeller Philanthropy) exposed that fossil fuel companies cut almost 60,000 jobs despite receiving billions of dollars in federal COVID-19 relief. The analysis, published by BailoutWatch, found that nearly 80 oil and gas companies took advantage of tax breaks in the CARES Act to improve cash flow and reward shareholders rather than saving jobs for their workers. Experts and advocates say these are an example of the many subsidies and give-aways for the oil and gas sector included in the tax code — subsidies that President Biden has promised to eliminate.
Why This Matters: These findings reveal two important points. First, that lucrative tax loopholes for the fossil fuel sector continue to be heavily exploited. Second, the narrative that oil companies are a “necessary engine of employment and succeed on an equal playing field in the free market” is hypocritical at best. As fossil fuel operations close, many states and former coal and oil communities are setting their sights on clean energy projects to provide new jobs and stability.For the Biden administration to keep its environmental and economic promises, it may have to completely reform corporate taxes to better support renewables and eliminate the numerous benefits for fossil fuels.
By the Numbers
According to BailoutWatch’s analysis, fossil fuel companies successfully lobbied Congress to bring back, and expand, a tax policy that had previously been eliminated. The policy allows companies to reduce past taxes from up to five years prior based on their recent yearly losses. This loophole proved lucrative.
77 companies pocketed a total of $8.24 billion due to tax law changes in the CARES Act
62 companies laid off a total of 58,488 workers and pocketed approximately $131,000 per employee left jobless.
It’s clear that “these companies did not use that money they received through the CARES Act to maintain payroll,” said Chris Kuveke, a BailoutWatch analyst. Payroll seemingly hasn’t been a priority for the fossil fuel industry at all in recent years. Even as oil and gas production increased, employment in the sector has dropped sharply since 2014. Thornton Matheson, a senior fellow at Urban-Brookings Tax Policy Center, said that it’s time to reimagine corporate welfare. “You can question both the size of those measures and how effective they were,” she said. “Are these tax breaks something that we want to give to large corporations, or do we want to focus them on small businesses?”
The industry denies that it receives special tax treatment, but in his $2 trillion infrastructure bill, announced Wednesday, President Biden pledged to eliminate oil and gas subsidies totaling at least $20 billion annually. Advocates and green energy leaders hope that some of that money will end up in the coffers of renewable energy companies. In March, White House national climate adviser Gina McCarthy said that clean energy subsidies would be of the administration’s future COVID-19 recovery proposals. Solar and wind energy leaders are urging lawmakers to include long-term green energy tax credits in future plans, and they have support, but whether or not these credits will fulfill some hefty campaign promises remains unanswered.
As for the 60,000 workers left jobless, it’s unlikely that they will find their way back to the fossil fuel sector. Across the nation, states and cities are struggling to ensure that former coal, oil, and gas communities find their footing in green energy, but if the government doesn’t shift its tax priorities, it will be all the more difficult to stabilize our energy workforce.
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