A Bloomberg analysis shows that companies that are connected to the oil industry received somewhere around $1.9 billion in tax benefits under federal coronavirus stimulus legislation.
After reviewing the Securities and Exchange Commission filings, the media outlet revealed that 37 companies claimed tax benefits through the $2.2 trillion CARES Act that was passed by Congress almost two months ago.
According to The Hill, one provision of the law gives companies greater ability to deduct recent losses: a key feature for an oil industry that saw prices drop from $50 in February to as little as negative $37 one day in April. Prices are now hovering near $30, but many in the industry have already sustained significant losses.
Companies will get refounds even in bankruptcy according to the new tax changes. Several experts told Bloomberg that it could pass years before some of those firms pay corporate income taxes again.
These provisions were mainly made to help companies, mostly the small ones who are not so immune to the worldwide economic consequences caused by the virus.
Democrats in Congress argue that these provisions might benefit the fossil fuel industry.
Senators Ed Markey (D-M-ass.), Jeff Merkley (D-Ore.) and Bernie Sanders (I-Vt.) wrote a letter to President Donald Trump in which they said:
“Using federal assistance – including low-interest loans, royalty relief, tax breaks, or strategic petroleum reserve purchases – in order to prop up oil companies would be a wasteful misuse of government resources that would exacerbate the climate crisis.’’
The Trump administration has looked for ways to assist the oil industry after a $3 billion request from the White House to fill the petroleum reserve of the US was left out of the CARES Act.
Expanded criteria for the Main Street Lending Program eased restrictions on borrowing for heavily indebted companies and also allows them to use the loans to refinance existing debts, The Hill reports.
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