The United States Internal Revenue Service: the Fourteenth Member of OPEC?

Abstract

In the early 1950s, the United States Internal Revenue Service (IRS) issued a ruling that permitted a tremendous transfer of income from US taxpayers and oil consumers to the oil-producing governments of the Middle East, thereby fostering growth in the economic and financial power of the nucleus of governments now forming the backbone of OPEC. At that time, the IRS ruled that ‘income taxes’¹ paid by oil companies to such governments were creditable against US tax liabilities on foreign operations. (Other consumer governments were then forced by the competitive demands of oil companies to provide similar tax credits, so that the effect was ultimately to transfer income from taxpayers in European countries as well.)

Journal of Post Keynesian Economics, 1 (Winter) 1979.