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The Latest Energy Tax-Hike Disguise
February 10, 2011
What is it with Washington’s warped calendar anyway? Valentine’s Day is just around the corner, but a group of Senators apparently can’t wait until Halloween. How else to explain a recent letter from leading Senate Democrats, calling on House Republican leaders to end “taxpayer-funded handouts to big oil companies that add little to our economic or energy security” so as to “make a down payment toward reducing nation’s deficit.” We shouldn’t be fooled by the disguise of deficit reduction; what the Senators propose is a very ugly tax hike.
Almost no other area of policy sees the terms “subsidies” and “spending” mangled, mutilated, and otherwise misused than energy. The list of signatories to the letter, which include Sens. Bill Nelson and Bob Menendez, ought to provide the first clue that we’re in for a linguistic contortion act. These are the same sponsors of legislation in the 111th Congress to do away with two provisions of the Tax Code that are available to a wide range of industries – but only for U.S. oil and gas companies. The Section 199 domestic manufacturers’ deduction and the dual capacity tax credit are, respectively, aimed at creating jobs and offsetting taxes paid to other countries, and provide tax relief for companies throughout the economy.
Question: In what world do laws that thousands of businesses of all kinds use to offset liabilities from a burdensome corporate tax system become “subsidies” when a handful of those businesses develop oil and gas? The answer, apparently, is a world of the Senators’ own creation, where they decide which companies “making billions in record breaking profits” should get singled out for higher tax bills.
Next Question: In what world does raising the tax burden of an individual or a company become, in the words of the Senators, “a good first step towards cutting spending”? The answer, again, is a world only Washington can inhabit, where deciding not to take 100 percent of everything Americans earn is an “expenditure” that needs to be budgeted.
It’s one thing if Congress wants to revisit these provisions across the board in the name of tax reform that will cut rates. It’s quite another when lawmakers hide their high-tax agenda behind the mask of “deficit reduction.” Welcome to Halloween in Washington. Be afraid … be very afraid.
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