The special interest tax breaks President Barack Obama seeks to close may not only benefit the wealthy, economic analysts say.
The president said Tuesday that Republican leaders have to choose between protecting tax loopholes that do nothing for the middle class or eliminating the loopholes to generate revenue.
“Are you willing to see a bunch of first responders lose their job because you want to protect some special interest tax loophole?” Obama asked Tuesday during a speech, flanked by first responders he claimed would be hurt. “Are you willing to have teachers laid off, or kids not have access to Head Start, or deeper cuts in student loan programs just because you want to protect a special tax interest loophole that the vast majority of Americans don't benefit from?”
The president's comments do not paint a full picture, analysts warn.
Obama’s previous remarks about tax loopholes have only been “in a general, abstract sense,” said William McBride, chief economist at the Tax Foundation. The special interest loopholes Obama specified were subsidies for oil and natural gas production and corporate jets. Closing these loopholes would recoup a minuscule fraction of the planned sequester cuts.
Closing the oil and natural gas production loophole may also have unintended consequences for everyday Americans. Corporate executives and board members own less than 3 percent of oil and natural gas companies, a report released in October 2011 showed.
“As it turns out, oil and gas companies, like most large American corporations, are not owned by a few wealthy individuals,” the Manhattan Institute reported in a separate study.
The Manhattan Institute report and an article in the New York Times showing laborers and shareholders bear some of the corporate tax burden combine to make a “fair assumption” that the elimination of oil subsidies could also hurt oil workers and shareholders, McBride said.
Oil subsidies cost the government $4 billion a year.