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An Open Letter to the United States Congress: The NAT GAS Act Is the Wrong Direction for Tax and Energy Policy

June 29, 2011

Dear Member of Congress:

On behalf of the 362,000 members of the National Taxpayers Union (NTU), I urge you to avoid the approach to tax and energy policy prescribed in H.R. 1380, the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act. Rather than attempt to pick winners and losers in the marketplace, Washington should evenly apply lower taxation across the spectrum of energy technologies in order to allow free markets to deliver the best outcomes for consumers.

Over the past several decades, Washington has placed a cumbersome thumb on the scale of the energy marketplace. This has often taken the form of mandates and refundable tax credits to support preferred industries, while implementing regulations and punitive taxes to hinder disfavored ones. Such heavy-handed manipulation has stifled the development of promising technologies, leading to reduced economic growth and higher energy costs.

Rather than begin the process of disentangling the web of government intervention choking efficient energy production, the NAT GAS Act would complicate the problem. The aim of H.R. 1380 is to utilize tax preferences and mandates to promote the production and use of natural gas vehicles, purportedly to advance domestic energy development. But there is no reason that this goal cannot be achieved without the market-distortions inherent in federal government involvement. In fact, according to the trade group Natural Gas Vehicles for America, there are already more than 12 million natural gas vehicles on the road worldwide and natural gas costs, on average, one-third less than conventional gasoline. Given these inherent qualities, consumers and investors ought to find this promising technology attractive in its own right. If current government policies are impeding this process, then Congress should be removing barriers rather than carving out special interest provisions in tax laws.  

If Congress truly wants to ensure that Americans have access to reliable and affordable energy sources, we encourage Members to follow the guidelines laid out in a coalition letter organized by NTU and signed by nearly 30 groups united in opposition to distortionary energy schemes. Namely, Congress should begin the process of dismantling the existing preferences that have been built into law in order to simplify and reduce tax burdens for all. Policymakers should neither favor nor punish particular industries or companies. In the near-term, elected officials could also open an economy-wide “repatriation window” to bring overseas profits back to our shores at less oppressive tax rates. Here again, this all-inclusive approach, even though temporary, would likely do much more to spur viable energy development than H.R. 1380.

As the world’s energy needs grow, functioning free markets, not interventionist style policies like the NAT GAS Act, will be necessary to successfully push technological development. Congress’ effort would be better spent on restructuring the entire tax system than continuing to tinker with its shaky structure.

Brandon Greife
Federal Government Affairs Manager