Congress is considering an extremely destructive “double tax,” through repealing a widely available credit that offsets taxes paid to other countries. However, this new “double tax” would apply only to energy providers here in the U.S. – meaning state-owned companies in countries like Venezuela and China will effectively receive a competitive edge over American firms. Ironically, even BP – the target of Congress’s ire over the Gulf spill – will gain a tax advantage. Also under consideration in the U.S. Senate is a repeal of Section 199 of the U.S. tax code, a manufacturers’ deduction, for only the oil and gas industry. The deduction allows companies to reinvest revenue into creating jobs and domestic economic growth.
The two provisions help to offset the high rates and complexity that make the U.S. corporation income tax system one of the most burdensome in the industrialized world. Repealing them would not only hurt one of the few relatively well-performing sectors of our economy, it could also signal a new wave of punitive tax policies aimed at politically convenient targets. Furthermore, with heavier across-the-board burdens looming due to inaction on extending the 2001 and 2003 taxpayer relief laws, the prospect of a recovery is already tenuous.
“These proposals have nothing to do with ‘fairness,’ ‘accountability,’ or responsibly reducing the federal budget deficit; instead, they are about imposing a double tax and an unfair burden on an industry that employs or supports over 9 million Americans,” said NTU Executive Vice President Pete Sepp. “The oil and gas sector provides abundant and diverse sources for the energy that fuels the rest of the U.S. economy. Raising costs on energy producers also means raising costs on small businesses and American families at a time when no one can afford it.”
