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Don’t Fall for the Kochs’ Claims on Oil Subsidies

24 Apr 2014  |   Andrew Seifter

NextGen Climate founder Tom Steyer evidently struck a nerve the other day, when he sought to distinguish himself from the Koch Brothers by pointing out that Charles and David Koch’s priorities “line up perfectly with their pocketbooks — and that’s not true for us.” 

The Koch Brothers’ spokesman responded that Steyer’s characterization was “false and disingenuous” because “Koch opposes all mandates and subsidies, even when they exist for businesses in which we operate.” It’s a claim that Koch representatives have made many times before. But is it true? 

In a word, no.

As the nonpartisan Center for Public Integrity (CPI) has documented, “Oil is the core of the Koch business empire, and the company’s lobbyists and officials have successfully fought to preserve the industry’s tax breaks and credits.” Based on a review of Koch Industries lobbying disclosure files and federal regulatory records, CPI found that Koch Industries has lobbied to preserve billions of dollars of oil industry subsidies, including the Section 199 manufacturing credit and the “last-in, first out” accounting rule.

Americans for Prosperity, a front group founded by the Koch Brothers, even included a Senate vote to repeal oil subsidies in its Scorecard for the 112th Congress, and penalized members of Congress for voting to stop sending billions of dollars in taxpayer-funded handouts to some of the most profitable companies on the planet. 

So what could the Koch Brothers possibly be basing this assertion on?

One possibility is that they are trying to draw a false distinction between tax credits and subsidies. But nonpartisan experts like the Tax Policy Center and Pew Charitable Trust say that tax credits are really just subsidies through the tax code, and that there is essentially no difference between the two. Prominent Republicans agree, including House Speaker John Boehner and Rep. Dave Camp, the chairman of the House committee tasked with writing tax policy.

Or maybe the Kochs only want to count industry-specific tax credits as “subsidies.”  The problem with that argument is that oil companies benefit from a whole host of industry-specific tax credits that do not apply to other companies, as the Joint Committee on Taxation has documented

One such industry-specific tax break is the deduction for intangible drilling costs, which happens to be one of the particular oil subsidies that Americans for Prosperity has vigorously defended. It also happens to be the single biggest oil industry subsidy, totaling $2.3 billion in fiscal year 2015 and $14.35 billion over the next 10 years.

Whatever the Koch Brothers’ rationale, we’ve seen this play before. In a desperate attempt to explain away his own oil-soaked voting record during a 2012 campaign event, then-Massachusetts Senator Scott Brown falsely claimed that “oil companies don’t get subsidies” and are only “able to take deductions like every other business.”

Brown wasn’t able to get away with his sleight of hand on oil subsidies, and the Koch Brothers shouldn’t be allowed to get away with it either. So the next time you hear the Koch Brothers claim that they “consistently oppose all subsidies,” don’t fall for their spin.



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