By Harry C. Alford
This is in response to a recent article in Roll Call by Congressman Charlie Rangel (D-N.Y.) titled “We Ain’t Broke” in which he stated:
“Last year, President Barack Obama called for a reduction of $4 billion from the annual subsidies the United States provides oil companies. Just as a comparison, the effective tax rate for practically every type of corporate asset is 26.2 percent. Thanks to the government subsidies, oil interests pay an effective annual tax rate of 9.2 percent. This is at the same time Big Oil (Exxon Mobil, Shell, BP, Chevron and ConocoPhillips) posted profits of $19.5 billion total during the last quarter — not the last year. And this figure represents a downturn.”
It wasn’t the first time that incendiary campaign-style rhetoric attempted such a bold masquerade as public policy prescription. Nor was it the first instance of extensive “economic data” being manufactured out of proverbial “whole cloth.” This is Washington, after all.
Neither is it rare for a Congressional staffer to pen a piece in his boss’s name. And, certainly, America’s oil and gas industry – daily derided as “Big Oil” – couldn’t have been shocked to once again find itself maligned in the furtherance of some political operative’s ideological agenda. Nope.
The only surprise inherent in, “We Ain’t Broke,” the error-riddled oil industry hit-piece was the caliber of the elected official to whom it was attributed: the esteemed Charlie Rangel.
Few in Washington can lay claim to a public service career that rivals Charlie Rangel’s.
A combat-wounded Korean War veteran, Charlie Rangel earned a law degree, counseled pioneering civil rights activists, marched on Selma, was appointed Assistant U.S. Attorney under Bobby Kennedy, challenged a well-known and powerful incumbent and won election to Congress with a bipartisan 88 percent of the vote – and, once there – became a founding member of the Congressional Black Caucus. All this before his 32nd birthday.
Charlie Rangel is now the third-longest currently serving member of the U.S. House of Representatives, having devoted 43 consecutive years of his life to his constituents’ concerns.
He is universally regarded as smart, charming, and likeable. And, with a seat on the powerful Ways and Means Committee since 1975 – chairing or serving as the ranking member for nearly 14 years – as well as experience at the helm of the Joint Committee on Taxation, Charlie Rangel is also a bona fide authority on the federal budget, a man thoroughly versed in even the most intricate details of U.S. tax-code minutia. That is why it was impossible to reconcile the man with the article to which his name was affixed.
If the congressional staffer responsible for writing the piece in Congressman Rangel’s name still has a job – and in this market, he should count himself fortunate for it – a crash-course in economics and current tax law is definitely in order. Especially considering that 2014 will feature a long anticipated overhaul of America’s bloated, arbitrarily punitive, and counter-productive corporate tax laws.
A good place to start would be the New York Times and its feature earlier in the year on corporate taxes. Utilizing data from the Standard & Poor’s Capital IQ, the Times plotted the total effective tax rate – local, state, federal and international combined, after credits and deductions – of companies on the S&P’s 500 index from 2007 to 2012.
While the data demonstrate a 29.1 percent effective rate for the S&P index as a whole, the average tax rate for the energy industry – “Big Oil,” in Rangel staffer parlance – came in significantly higher, at 37 percent.
Of course, America’s three largest energy firms – Exxon Mobil, Chevron, and ConocoPhillips – paid well above even that average in their effective rates – 37, 39, and 74 percent respectively. In absolute terms, those three companies combined paid the most of any companies: $289.7 Billion, from 2007 to 2012. Again, these are findings published in the New York Times, and they describe rather a different universe than the “9.2 percent” – and the “billions in subsidies” – cited in the “Rangel” piece.
Additional highly sourced economic reality can be found within the Progressive Policy Institute’s (PPI) annual “Investment Heroes” report, (http://ow.ly/ssWnz) which documents the leading role that oil and natural gas production has had on U.S. economic growth and job creation; of the $56.1 billion invested by the energy sector in 2013, eight of the top 25 companies hail from oil and gas industry.
It was our energy industry that fed our economy during World War II while Germany and Japan literally ran out of its energy supply and had to capitulate to the allies. Yes, our energy industry is our economic life blood as well as a key component to our national security.
“Rangel” can feast on inexhaustible data demonstrating the oil and gas industry’s support of more than 9.2 million American jobs, (http://ow.ly/ssW7e) and its deep investment in America’s current and future economy. While his boss surely doesn’t need the education, let’s hope the staffer posing as “Rangel” helps enlighten his Congressional colleagues with some of his newly-acquired tax acumen. Maybe then we can all have confidence that corporate tax reform will augment rather than handicap America’s economic growth, her energy security, and her richest source of tax revenue.