NTU Supports H.R. 3308, the "Energy Freedom and Economic Prosperity Act"

DearRepresentatives Pompeo and Labrador:

   On behalf of the 362,000 members ofthe 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 repealor expedite the dissolution of a number of distortionary energy-policy schemesand use any additional revenues for a broad-based reduction in the corporatetax rate.

   Over the past several decadesWashington has spun a complicated web of energy provisions that more oftenserve narrow, powerful interests rather than consumers or taxpayers.  The increasing political clout of advocatesfor renewable and energy efficient technologies has accelerated this trend. Areport by the Energy Information Administration found that from Fiscal year2007 through Fiscal Year 2010, total federal energy subsidies increased from$17.9 billion to $37.2 billion, with the lion’s share going to renewableenergy. Despite this enormous growth, government’s interventionist stance hasfailed to achieve economically-worthwhile objectives, and indeed it has oftenproven counterproductive. As a joint statement from nearly 30 citizen groupsand think tanks that NTU organized earlier this year noted: “Instead of promoting a reliable and affordable energy industry, thesubsidy-first energy policy that has prevailed the past three decades hascreated whole industries dependent on government and focused as much onensuring their share of taxpayer largesse as they are on developing energy.”

   The EFEPA would begin thelong-overdue process of establishing a coherent, consistent tax and energypolicy that will better serve our economy and its citizens. Specifically, thebill would ensure that energy tax credits scheduled to expire at the end of2011 would not be renewed and accelerate the sunset-date of any remainingenergy tax credits to the end of 2012.  Soas to ensure that government’s coffers do not improperly overflow from awindfall at taxpayer expense, the estimated $90 billion in revenue over thenext ten years would then be used to provide a comparable reduction in thecorporate tax rate.

   Passage of the EFEPA would alsoeliminate a number of “hidden” taxes on consumers that arise from the federalgovernment’s manipulation of energy markets. The current practice of bestowingcompetitive advantages upon politically favored energy sources not onlyallocates capital away from more efficient uses, but also crowds outprivate-sector investment in other technologies that may be more commerciallyviable. Indeed, history has shown Washington has a poor track record of pickingwinners, which has resulted in higher energy costs and less innovation than hadfree-market principles be allowed to operate.

   Too often, public officials motivated byideology have labeled conventional tax laws “subsidies” to punish a particularsector. Such has been the case recently with those seeking to repeal items likethe Section 199 deduction only for certain oil and gas companies. Fortunately,your bill avoids this mistake by focusing solely on energy-specific credits andby devoting revenues to comprehensive tax reform.

   America’s Tax Codedesperately needs simplification of the base, lower rates, and more rationaltreatment of earnings already subject to taxes abroad. H.R. 3308 could providean exemplary demonstration of how these goals can be achieved systemically. Therefore,NTU applauds the introduction of the Energy Freedom and Economic Prosperity Actand encourage your colleagues to support this important bill.  

Sincerely,

Brandon Greife

FederalGovernment Affairs Manager