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Trump’s Tax Plan Provided Massive Tax Breaks to the Oil Industry

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The Tax Codes and Jobs Act passed by President Donald Trump and congressional Republicans in 2017 has disproportionately benefited corporate America—especially the oil industry.

According to a study published this month by the Institute on Taxation and Economic Policy (a non-profit, non-partisan think tank), many large oil companies paid no taxes last year. The plan lowered corporate taxes from 35 percent to 21 percent, altered international tax rules, and created a deduction for non-corporate business income in addition to other reforms.

Many of these companies garnered such benefits using a policy of accelerated depreciation, which allows companies to write off capital investment costs significantly faster than the expiration of these investments, allowing them to drastically reduce their tax rates. According to the report, Chevron reported $290 million of depreciation-related tax breaks in 2018, and Halliburton reduced its taxes by $320 million.

Although accelerated depreciation (much like the tax cuts in general) is supposed to encourage business investment, it seems unlikely that it will achieve that goal because research suggests that companies don’t usually make investment decisions based on tax rates.

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