The fossil fuel industry is leveraging its deep political influence to dismantle corporate tax reforms, securing billions in additional tax breaks while maintaining century-old subsidies. After spending $445 million during the 2024 election cycle to elect Donald Trump and Republican majorities in Congress, Big Oil is now pressing lawmakers to eliminate a corporate minimum tax enacted under former President Joe Biden’s Inflation Reduction Act (IRA).
Leading the charge is Senator James Lankford (R-Okla.), whose Promoting Domestic Energy Production Act would allow oil and gas companies to sidestep the corporate alternative minimum tax (CAMT)—a tax designed to prevent highly profitable corporations from paying little to nothing in federal income taxes. If successful, this measure could cost the federal government billions in lost revenue, while forcing cuts to essential programs like Medicaid and food stamps.
The fossil fuel industry has long used campaign contributions and lobbying to influence lawmakers, and its financial backing of the Republican Party has only intensified.
• Oil and gas companies spent $445 million during the 2024 election cycle, ensuring that Trump and a Republican-controlled Congress would advocate for their financial interests.
• According to Alan Zibel, research director at Public Citizen, “Oil and gas companies are using the political influence they purchased to dodge paying even a minimal part of their fair share.”
• Senator Lankford, the top recipient of oil and gas money in Congress, has received over $546,000 from the industry since 2019, according to OpenSecrets.
• Industry-backed organizations, including the American Petroleum Institute, U.S. Chamber of Commerce, and National Mining Association, are actively lobbying for Lankford’s bill.
In 2022, the Inflation Reduction Act established the corporate alternative minimum tax (CAMT) to prevent companies with at least $1 billion in annual income from exploiting loopholes to avoid taxes. Under the CAMT, these corporations are required to pay at least 15 percent of their reported income in taxes.
Lankford’s bill would effectively exempt fossil fuel companies by allowing them to deduct “intangible drilling costs”—a tax loophole dating back over 120 years. This provision, originally intended to incentivize oil drilling in the early 20th century, now serves as a massive handout to some of the most profitable companies in the world.
Lukas Shankar-Ross of Friends of the Earth described the loophole as “the oldest and the largest fossil fuel subsidy on the books,” allowing oil and gas companies to write off the full cost of drilling a well immediately, instead of over time. By doing so, these companies can artificially reduce their taxable income, often eliminating their tax liabilities entirely.
The cost of Big Oil’s tax breaks
Republican lawmakers are proposing $4.5 trillion in tax cuts, primarily benefiting large corporations and the ultrawealthy. The fossil fuel industry, already benefiting from $170 billion in existing subsidies, stands to gain billions more through Lankford’s proposed exemption.
The consequences of these handouts will be felt by ordinary Americans. To pay for these corporate tax breaks, Republicans may slash Medicaid, SNAP (food stamps), and other social programs.
Shankar-Ross warned, “If this polluter handout is snuck into the GOP tax bill, then cuts to Medicaid and food stamps could well pay for another giveaway to Big Oil. That’s obscene.”
How Big Oil manipulates the tax system
The fossil fuel industry has long relied on loopholes and foreign tax schemes to minimize its U.S. tax burden.
• The “dual capacity taxpayer rule” allows oil companies to claim foreign royalty payments as tax credits, reducing their U.S. tax obligations.
• ExxonMobil, Chevron, and other oil giants pay more in foreign royalties than in U.S. taxes. In 2023:
• ExxonMobil paid $1.8 billion to the UAE, $1 billion to Alberta, Canada, and $761 million to Nigeria.
• Chevron paid $2 billion in foreign royalties.
• According to Zorka Milin of the Financial Accountability & Corporate Transparency Coalition, “They make huge payments to governments around the world, including to some in some pretty shady places, and what is adding insult to injury is a lot of those payments are used to offset payments they pay here in the U.S.”
These tax maneuvers allow oil companies to pay significantly less in U.S. taxes than they otherwise would, shifting the financial burden onto American taxpayers.
The broader Republican tax plan
While pushing for Big Oil’s tax exemptions, Republicans are advancing a massive corporate tax cut package that will disproportionately benefit the wealthiest Americans.
• The National Taxpayers Union estimates that corporations will receive at least $1.2 trillion in direct benefits from the GOP tax package.
• The fossil fuel industry is lobbying for additional breaks, including the extension of overseas tax credits that could save oil companies $71.5 billion over the next decade.
• Climate advocates argue that continuing to subsidize oil and gas production directly contradicts global efforts to cut emissions and transition to clean energy sources.
Who benefits and who pays?
• Winners:
• Major fossil fuel companies: ExxonMobil, Chevron, EOG Resources, APA Corp., and Ovintiv.
• Republican politicians funded by the oil and gas industry, including Senator Lankford and House GOP leaders.
• Losers:
• Everyday taxpayers, who will bear the cost of corporate tax breaks.
• Low-income Americans, who may see cuts to Medicaid, food assistance, and other essential programs.
• Climate policy advocates, as government spending continues to prop up fossil fuel expansion instead of clean energy.
Big Oil has spent decades influencing U.S. tax policy, ensuring that it continues to receive billions in government handouts while avoiding taxes.
The latest push to eliminate the corporate minimum tax is a direct attack on climate policy, tax fairness, and economic justice.
Alan Zibel, of Public Citizen, put it plainly: “If individual taxpayers understood the magnitude of the extreme subsidies for Big Oil, they would be shocked. The newest effort to bypass even the most modest of tax bills by the industry is shocking, but sadly not surprising.”
COMMENTS