On cue, President Obama has parlayed House Speaker John Boehner's off-the-cuff remark with ABC News into an appeal for the administration's tax hikes for oil and natural gas companies.Technorati tags: Democrats politics Republican economy Drill here, drill now government energy oil Obama Barack Obama
The brouhaha over the speaker's words is the latest example of how so many members of the political class — as well as the media — have bought into the administration's rhetoric about ending "subsidies" for the oil and gas industry. But as we've explained before, a major portion of the "taxpayer money" the president seeks from the oil and natural gas industry is not a subsidy. It is a provision in the tax code known as "dual capacity," which enables the oil and natural gas companies operating overseas to avoid double taxation on income earned and taxed abroad. This well-established tax policy is meant to take the edge off an outdated U.S. corporate tax system that levies high rates and pursues income our firms earn abroad in a way that virtually no other developed country does.
Taking aim at oil and gas companies by removing dual capacity provisions, alongside Section 199 incentives (available to all manufacturers operating in the U.S. to promote job growth domestically), would eliminate 154,000 jobs and $341 billion in lost economic activity, according to a recent economic analysis.
Equally important, repeal of dual capacity provisions will not meaningfully reduce America's ballooning national debt — it may actually work in the opposite direction. We recently argued that our government must shun tax hikes and focus instead on comprehensive spending restraint. Furthermore, oil and gas operations add nearly $100 million a day to federal coffers from mineral rights, corporate taxes, and other fees energy companies pay to our government. The president's proposal to claw back what he calls tax preferences for oil and gas companies will raise the price of energy for all Americans by making the cost of production even higher than it already is.
Friday, April 29, 2011
Oil: The slippery and expensive slope of those 'subsidies'
pointed out yesterday. And an expensive one for consumers.