The president’s tax reform agenda should terrify environmentalists

Originally posted in The Hill.

This week Donald Trump planted himself in front of an oil refinery in North Dakota to talk about tax cuts. The whole spectacle was a reminder that the GOP tax reform agenda could be a disaster for the environment.

The speech itself didn’t communicate many new specifics. The President is still promising massive tax cuts with nothing resembling a plan to pay for them. The one page summary released nearly five months ago had about the same level of detail as Wednesday’s speech.

The setting, however, communicated plenty. Staging the rally in North Dakota seems meant to bully Sen. Heidi Heitkamp (D-N.D.) into breaking with her caucus and supporting tax cuts for the rich. Staging the rally at a refinery and allowing oil billionaire Harold Hamm to join him on stage seems meant to reassure the fossil fuel industry. It signals that as discussions about tax reform continue, polluters needn’t worry about the repeal of billions in special interest tax breaks.

If the GOP tax agenda were remotely serious about closing loopholes to lower overall rates, the fossil fuel industry would rightly have a lot to fear. The billions worth of goodies that have kept their taxes artificially low for the better part of a century would suddenly be in danger.

But with Trump at the helm, this fear just isn’t realistic. The president and his collaborators in Congress are all but certain to protect the estimated $135 billion in giveaways expected to pass to oil, gas and coal over the next decade — the most prominent of which are tax code carve-outs allowing polluters to more quickly recover their investment costs.

The stumbling block in all of this is revenue. The GOP’s current tax reform wish list — including deep cuts for corporations and repealing the inheritance tax — is expensive. Without help from Democrats, it is procedurally impossible for Republicans to pass permanent changes to the tax code unless they are fully funded. Whether from corporate welfare or tax incentives for the poor, the revenue is going to need to come from somewhere.

In a sane world, billions in subsidies to the industry driving the climate crisis would be the first thing on the chopping block to fund lower tax rates. Unfortunately, the world is less than sane, and a speech on tax policy in the literal shadow of an oil refinery is the clearest indication yet that Trump and the GOP have zero interest in generating revenue from clamping down on polluter tax cuts.

Talking about tax fairness at North Dakota’s Mandan refinery is especially strange. Recently expanded in 2012, it almost certainly benefitted from a Bush-era tax giveaway allowing 50 percent of expansion costs to be deducted immediately. Starting in 2015, the facility likely began claiming yet another tax handout specifically for independent refiners. The provision was snuck into a must-pass spending bill by Sen. Tom Carper (D-Del.) — dirty energy subsidies can be a bipartisan enterprise.

Another layer of irony is that the Mandan refinery is fed predominantly with crude oil from the Williston Basin, the booming region that includes North Dakota’s Bakken Shale. According to the Stockholm Institute, without subsidies, 2.4 billion barrels of Williston crude would be left in the ground over the next two decades. Cutting century-old tax giveaways for drilling like the percentage depletion allowance would see a full 59 percent of future production cease to be economic. That’s a huge tilting of the scales in favor of Big Oil.

With numbers like these, is it any wonder that Big Oil would use lobbying muscle to protect its special treatment? In fact, the tax debate so far has already been heavily skewed by polluter priorities. Consider the fact that Charles and David Koch, who made much of their original fortune importing tar sands from Canada, were instrumental in scaring House Republican leaders away from a border adjustment tax — a measure that coincidentally would have increased the cost of importing tar sands and other fuels into the United States.

Exactly what happens next is hard to determine, but there are a couple of obvious paths forward. Republican leadership could settle for temporary tax cuts that expire after a decade. The president could succeed in browbeating enough vulnerable Democrats to join him, in an effort to give whatever he signs the pretense of bipartisanship. Or the GOP might be able to find enough offsets to allow for both dirty energy subsidies and permanent tax cuts for the rich.

All of these outcomes represent some combination of cutting taxes for the rich and leaving polluter subsidies intact. That is why the best option for the planet is stopping tax reform in its tracks. The GOP tax agenda is no more inevitable than its healthcare agenda — and if environmentalists join with the dozens of other progressive groups resisting tax cuts, they can help to stop it in exactly the same way.