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NTU urges all Senators to vote “NO” on S. 2204, the so-called “Repeal Big Oil Tax Subsidies Act.”
March 26, 2012
By Nan Swift
NTU urges all Senators to vote “NO” on S. 2204, the so-called “Repeal Big Oil Tax Subsidies Act.” This bill would single out the energy industry for damaging tax hikes under the false premise of eliminating “subsidies.”
S. 2204 would raise taxes by eliminating for oil and gas firms five legitimate parts of tax law that help to offset business expenses. Prominent among them are the Section 199 deduction, which is available to all kinds of domestic manufacturers, and the “dual capacity” tax credit, which prevents energy companies from being double-taxed on their operations abroad. These provisions result in no additional federal spending and efforts to eliminate them are nothing more than punitive, targeted tax hikes on a politically-convenient industry.
Section 199 already creates a separate distinction for energy companies from the rest of the manufacturing sector. Though oil and gas firms rank below average for other manufacturing businesses (with single-digit profit margins), they receive only a 6 percent deduction as opposed to the 9 percent other, more profitable, industries garner. Heaping a $12 billion tax hike on a growing domestic industry risks thousands of jobs while threatening to add to sky-high gas prices. Furthermore, despite being able to utilize the provisions S.2204 seeks to eliminate, this sector still pays average effective tax rates of more than 40 percent. This is simply not the picture of an industry swindling the American public to avoid paying its “fair share.”
Also included in S. 2204 are a series of tax credit extensions for renewable and energy efficient products and industries such as certain plug-in electric vehicles and cellulosic biofuel producers. Rather than use the Tax Code to pick winners and losers in the energy marketplace, Congress should focus its efforts on overhauling our laws to ensure equitable treatment across the board on all forms of energy, traditional or alternative.
Roll call votes on S. 2204 will be included in our annual Rating of Congress and a “NO” vote will be considered the pro-taxpayer position.
If you have any questions, please contact NTU Federal Affairs Manager Nan Swift at (703) 683-5700