Energy tax hikes would cut revenues

According to the Mason study, these tax increases would raise an extra $30 billion in the next 10 years — but would result in less energy production and fuel manufacturing by American companies, thereby cutting U.S. tax collections by $83.5 billion over 10 years. This would result in the federal government getting $53.5 billion less revenue, according to the study.

{mosads}In addition, the Mason study found that the two tax increases would cost the U.S. economy $341 billion in lost economic output, 155,000 jobs and $68 billion in wages over 10 years.

“The administration’s proposal to eliminate tax deductions on U.S. oil and gas companies is grossly counterproductive toward the goal of increasing federal revenues,” Mason said. “Such a move would have a net negative impact on revenue, thereby increasing federal deficits.”

Mason points out that the tax provisions he studied are not subsidies specific to fuel and petrochemical manufacturers and the producers of oil and natural gas, but rather “tax credits available to most every American company.”

The companies President Obama has targeted for discriminatory tax increases are not asking for government assistance or special tax treatment. We just want the same deductions other American businesses get to preserve and create jobs for American workers.

Another counterproductive tax increase being proposed by President Obama, affecting many types of American companies, would bar the use of an accounting technique known as LIFO, which stands for last in, first out. The Obama administration projects the elimination of LIFO — which has been allowed since the 1930s — would raise $65 billion to $95 billion over 10 years.

However, eliminating LIFO would make American companies less competitive with foreign companies at a time of high U.S. unemployment and a continuing exodus of American jobs abroad. Exporting still more American jobs would increase unemployment and cut tax collections — further driving up our nation’s deficit.

Instead of targeting the American oil and gas sector for higher taxes — and cutting tax collections as a result — President Obama, federal agencies and Congress should follow an alternate course that would bring tens of billions of dollars more to the U.S. Treasury and create millions of new American jobs.

The alternate course would be to:

• Open up more parts of the United States to oil and natural gas exploration and production in an environmentally safe manner.

• Ease overregulation of fuel and petrochemical manufacturers that accomplishes nothing for the environment but increases manufacturing costs and gives foreign competitors an unfair advantage over American companies and their American workers.

• Allow construction of the Keystone XL pipeline to bring more crude oil from Canada to American refineries, reducing our reliance on oil from more distant and less friendly parts of the world and supporting as many as 465,000 American jobs by 2035.

Killing the goose that laid the golden eggs sounded like a good idea to the farmer in Aesop’s fable, but wound up depriving him of future gold. Imposing new taxes on American oil, natural gas, refining and petrochemical companies makes as much sense.

While these energy tax hikes may sound like a quick way to generate more cash, in the end they would deprive our federal, state and local governments of billions of dollars of revenue each year, and wipe out some of the more than 9 million jobs the oil and gas sector supports. This is the wrong prescription to cure America’s weak economy, high unemployment and budget deficits.

Charles T. Drevna is president of the National Petrochemical & Refiners Association.