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NTU Supports H.R. 3308, the "Energy Freedom and Economic Prosperity Act"
November 30, 2011
The Honorable Mike Pompeo United States House of Representatives 107 Cannon House Office Building Washington, D.C. 20515
The Honorable Raul Labrador United States House of Representatives 1523 Longworth HOB Washington DC 20515
Dear Representatives Pompeo and Labrador:
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write in support of your bill, H.R. 3308, the “Energy Freedom and Economic Prosperity Act” (EFEPA). This bill would repeal or expedite the dissolution of a number of distortionary energy-policy schemes and use any additional revenues for a broad-based reduction in the corporate tax rate.
Over the past several decades Washington has spun a complicated web of energy provisions that more often serve narrow, powerful interests rather than consumers or taxpayers. The increasing political clout of advocates for renewable and energy efficient technologies has accelerated this trend. A report by the Energy Information Administration found that from Fiscal year 2007 through Fiscal Year 2010, total federal energy subsidies increased from $17.9 billion to $37.2 billion, with the lion’s share going to renewable energy. Despite this enormous growth, government’s interventionist stance has failed to achieve economically-worthwhile objectives, and indeed it has often proven counterproductive. As a joint statement from nearly 30 citizen groups and think tanks that NTU organized earlier this year noted: “Instead of promoting a reliable and affordable energy industry, the subsidy-first energy policy that has prevailed the past three decades has created whole industries dependent on government and focused as much on ensuring their share of taxpayer largesse as they are on developing energy.”
The EFEPA would begin the long-overdue process of establishing a coherent, consistent tax and energy policy that will better serve our economy and its citizens. Specifically, the bill would ensure that energy tax credits scheduled to expire at the end of 2011 would not be renewed and accelerate the sunset-date of any remaining energy tax credits to the end of 2012. So as to ensure that government’s coffers do not improperly overflow from a windfall at taxpayer expense, the estimated $90 billion in revenue over the next ten years would then be used to provide a comparable reduction in the corporate tax rate.
Passage of the EFEPA would also eliminate a number of “hidden” taxes on consumers that arise from the federal government’s manipulation of energy markets. The current practice of bestowing competitive advantages upon politically favored energy sources not only allocates capital away from more efficient uses, but also crowds out private-sector investment in other technologies that may be more commercially viable. Indeed, history has shown Washington has a poor track record of picking winners, which has resulted in higher energy costs and less innovation than had free-market principles be allowed to operate.
Too often, public officials motivated by ideology have labeled conventional tax laws “subsidies” to punish a particular sector. Such has been the case recently with those seeking to repeal items like the Section 199 deduction only for certain oil and gas companies. Fortunately, your bill avoids this mistake by focusing solely on energy-specific credits and by devoting revenues to comprehensive tax reform.
America’s Tax Code desperately needs simplification of the base, lower rates, and more rational treatment of earnings already subject to taxes abroad. H.R. 3308 could provide an exemplary demonstration of how these goals can be achieved systemically. Therefore, NTU applauds the introduction of the Energy Freedom and Economic Prosperity Act and encourage your colleagues to support this important bill.
Sincerely,Brandon Greife Federal Government Affairs Manager