Big oil, like all companies, would get tax break

A new TV ad from the Obama campaign called "New Energy" takes three swipes at John MCain.

We've addressed two of them previously at PolitiFact: that McCain voted with President Bush 95 percent of the time; and that McCain's plan to open up offshore drilling wouldn't result in oil production for at least seven years.

Here we will focus on an attack in the ad that has become a common jab in Obama's stump speeches: "McCain will give more tax breaks to big oil."

If you read the small print at the bottom of the ad, it cites a March 27, 2008 report from the Center for American Progress Action Fund. The report is titled "The McCain Plan to Cut Oil Company Taxes by Nearly $4 Billion."

Here's how the think tank - which is headed by former Clinton chief of staff John D. Podesta - arrived at its headline. McCain has proposed cutting the corporate tax rate from 35 percent to 25 percent to make U.S. corporations more competitive.

Says the McCain campaign Web site: "John McCain believes the taxes we impose on American companies should be no higher than the average rate our major trading partners impose on theirs. We currently have the second-highest combined corporate-tax rate in the industrialized world, and it is driving many businesses and the jobs they create overseas."

The Center for American Progress Action Fund grabbed the five largest U.S. oil companies from Fortune Magazine's list of the Fortune 50. Then they obtained financial statements for those five companies from the Securities and Exchange Commission and listed the reported current and deferred taxes paid in 2007 to the federal government for income earned from U.S. operations. Based on those figures, they calculated how much less those companies would pay if the corporate tax rate were dropped from 35 percent to 25 percent. The total savings to the five oil companies, $3.8 billion; $1.2 billion Exxon Mobil alone.

Obama cited these same numbers in a speech on June 24th, 2008, in Las Vegas.

"He's willing to spend nearly $4 billion on more tax breaks for big oil companies," Obama said, "including $1.2 billion for Exxon alone."

Obama is cherry-picking here. The corporate tax rate reduction would apply to ALL corporations. Yes, Exxon Mobil, but also to Wal-Mart, General Motors and Home Depot, to name a few of the other Fortune 50 biggies. Even everybody's favorite, Starbucks, would get the same tax break.

Obama's statement is technically true, but singling out oil companies suggests McCain has targeted oil companies for tax breaks. He hasn't. We rate Obama's statement, and the claim in the ad, Barely True.

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As for the other two claims in the ad:

* "McCain and Bush support a drilling plan that won't produce a drop of oil for seven years."

We addressed this before in PolitiFact, finding that most oil experts say if the U.S. pursued oil drilling in prohibited offshore areas, as McCain has proposed, it would take at least 10 years to realize any significant oil production. McCain has even acknowledged that fact himself, saying in a June 23 town hall meeting in Fresno, Ca., "Even though it may take some years, the fact that we are exploiting those reserves would have psychological impact that I think is beneficial."

* McCain has "voted with Bush 95 percent of the time."

We've also dealt with this claim previously and concluded that it accurately reflects a 2007 "presidential support" score from Congressional Quarterly.