The Congressional “Super Committee” is examining a lot of options in order to find ways to reduce the federal deficit; some good, some bad, but there is one that is absolutely the worse. The plan to raise taxes (mostly by changing rules on various tax deductions) on the oil and gas industry is a disaster in the making. While trumpeted by the White House in their populist campaign to demonize “Big Oil”, these increased taxes will have negative impacts in a variety of ways.
The proposal to tax domestic producers on international earnings already taxed puts them at a disadvantage to foreign competitors. When combined with a loss of manufacturing tax deductions, this will lead to decreased domestic investment and production, fewer jobs, higher energy prices and an increased dependence on foreign energy.
Increasing taxes on the oil companies will inevitably result in higher gas prices. The economy has already suffered as we have flirted with $4 a gallon gas, now is not the time to raise taxes on the production of gasoline. The more expensive the government makes domestic production, the more oil and gas we have to import, and the more we rely on sometimes hostile foreign countries for our energy. A study found that by 2020, these tax increases will have resulted in a loss of 48,000 jobs, $29 billion in lost government revenue and a decline in domestic production of 700,000 barrels of oil a day.
Given the current condition of the economy, this moves us 180 degrees in the wrong direction. The American energy industry is one of the few sectors that is still productive, adding jobs and contributing to the Treasury instead of looking for handouts and bailouts. Rather than levying more punitive taxes, we should be looking at how the government can promote more production, creating new jobs and providing more to the public coffers through growth. A study by Wood Mackenzie predicts that if we worked to promote greater oil and gas development, by 2020 we could create more than a million new jobs, increase government revenues by $127 billion and produce an additional 4 million barrels of oil a day here in the US.
“Super Committee” members like Senator Patty Murray need to understand that the real way to reduce the deficit is not through tax increases that stifle the economy. This especially applies to the oil and gas industry, the one segment of the economy that, if allowed, could actually lead America back to a healthy economy.
We need to tell Senator Patty Murray – Do not levy new taxes on oil and natural gas companies. Adding even more taxes serves only to hamper job growth, chill capital investment and harm energy security and national security. Increased taxes aren’t the answer – less spending is.
Call Senator Murray at (866) 481-9186 to make your voice heard!
[photo credit: DonkeyHotey]