- There are calls for #Congress to eliminate tax subsidies for major energy companies. Why that's a bad idea:
- If the rule of law means anything it is equal treatment under the law.
- The potential economic harm that can result from weakening the rule of law is difficult to understate.
As the so-called Congressional Super-Committee (SC) looks at ways to tackle the nation's long run budget challenges it is being bombarded with suggestions from Capitol Hill. One suggestion calls on the SC to eliminate tax subsidies for major energy companies. As someone who is generally opposed to subsidies, let me explain why this move is a very bad idea.
The subsidies in question are currently offered to domestic manufacturers of all kinds; energy majors are just a small number of those firms subject to the provision. The proposed change would eliminate this tax treatment for energy majors but leave it in place for other manufacturers.
As my colleague Alan Viard has noted, singling out big American energy firms for this kind of treatment is abusive and a "glaring violation of the rule of law." If the rule of law means anything it is equal treatment under the law. Yet, the proposed change of tax treatment singles out a small handful of firms for disparate tax treatment that is not applied to other similar firms.
Make no mistake, broadening the tax base is sensible policy, especially when the base broadening is coupled with lowered tax rates. Nevertheless, the spiteful campaign against one slice of American industry simply because it happens to be unpopular with some members of Congress is injurious to one of the nation's most crucial and valuable intangible assets – the rule of law and equal treatment under the law. The potential economic harm that can result from weakening the rule of law is difficult to understate.
Nick Schulz is editor-in-chief of American.com and the DeWitt Wallace Fellow at AEI