Energy Tax Hikes Not an Option for Super-Committee
There are many options for our nation’s new federal deficit super-committee to consider, but one of them must not be tax increases on domestic energy producers. Our readers know this story all too well; Democrats couching new oil and gas taxes in terms like “tax reform” or “changes to the tax code.” Yes, tax reform is long overdue but it isn’t something that should be done on-the-fly in order to meet an arbitrary date. November 23rd is the deadline for this commission to bring forth their plan to reduce $1.5 trillion in federal spending over the next decade and that is already quite a tall order.
The Obama administration continues to recommend targeted tax hikes vis-à-vis the repeal of widely available business tax deductions solely for the oil and gas producers. Provisions such as tax credits for dual capacity taxpayers and the Section 199 manufacturing deduction are standard fare for all businesses, yet members of Congress propose their elimination as a means to institute backdoor tax increases on domestic energy producers at every turn. This ignores the fact that production cost increases would put these companies at a steep global disadvantage and impede their ability to develop and provide a secure and affordable supply of energy to our nation.
First and foremost, changes to our tax code do not belong in this discussion about how to reduce federal spending. But even more importantly, the unintended consequences of such actions would far overshadow any revenue that stands to be gained by hiking energy taxes. A recent study by Louisiana State University economist Dr. Joseph Mason points out that Congress and the Treasury expect these proposed changes to ramp up our nation’s tax revenue by roughly $30 billion over the ensuing decade.
Unfortunately, this would be at the expense of some $341 billion in economic output and at the cost of 155,000 jobs. With that comes $68 billion in lost wages and $83.5 billion in reduced tax revenues resulting in a net fiscal loss of $53.5 billion in tax revenues. It doesn’t take an economist or tax expert to recognize that these tax policies are a poor plan that would put us deeper into the hole we are currently trying to climb out of. To put it in Hoosier terms, voting against this plan is a no-brainer.
Fortunately, Indiana is represented by wise lawmakers like Senators Lugar and Coats who have consistently opposed such measures, but now our fate rests in the hands of the new federal deficit commission. We must trust that they understand the gravity of this matter and will stick to the job of identifying ways to reduce federal spending rather than trying to rewrite the tax code. Most importantly, Republicans must not give ground to these stealth energy tax hikes.