NTU: Dems planning to hike taxes on oil, energy companies

posted at 7:00 pm on September 2, 2010 by Ed Morrissey

During the presidential campaign, Barack Obama repeatedly vowed to force American companies to pay taxes on overseas earnings, rather than take a tax credit for taxes paid by its international operations.  Eventually the White House backed down from that plan after heavy criticism from business leaders made it clear that multinationals would simply move their headquarters elsewhere, and smaller firms would simply be left uncompetitive in the global market.  A similar plan has returned, the National Taxpayers Union warns, only this time it’s just targeted at the oil and energy industries — along with another tax change that would strip American companies of a manufacturing credit that keeps jobs in the US:

Congress is considering an extremely destructive “double tax,” through repealing a widely available credit that offsets taxes paid to other countries. However, this new “double tax” would apply only to energy providers here in the U.S. – meaning state-owned companies in countries like Venezuela and China will effectively receive a competitive edge over American firms. Ironically, even BP – the target of Congress’s ire over the Gulf spill – will gain a tax advantage. Also under consideration in the U.S. Senate is a repeal of Section 199 of the U.S. tax code, a manufacturers’ deduction, for only the oil and gas industry. The deduction allows companies to reinvest revenue into creating jobs and domestic economic growth.

The two provisions help to offset the high rates and complexity that make the U.S. corporation income tax system one of the most burdensome in the industrialized world. Repealing them would not only hurt one of the few relatively well-performing sectors of our economy, it could also signal a new wave of punitive tax policies aimed at politically convenient targets. Furthermore, with heavier across-the-board burdens looming due to inaction on extending the 2001 and 2003 taxpayer relief laws, the prospect of a recovery is already tenuous.

“These proposals have nothing to do with ‘fairness,’ ‘accountability,’ or responsibly reducing the federal budget deficit; instead, they are about imposing a double tax and an unfair burden on an industry that employs or supports over 9 million Americans,” said NTU Executive Vice President Pete Sepp. “The oil and gas sector provides abundant and diverse sources for the energy that fuels the rest of the U.S. economy. Raising costs on energy producers also means raising costs on small businesses and American families at a time when no one can afford it.”

The NTU will put its money where its mouth, or press release, is.  They have committed to $4 million in ad buys on cable news networks and local television in selected states to make its point:

Both of these changes are a problem for the energy industry and consumers. As the NTU points out, eliminating the Section 199 tax credits removes incentives for American companies to keep jobs at home. That’s the exact opposite direction of Democratic rhetoric, which usually refers heavily to “outsourcing” jobs on the global market. They will keep Section 199 in place, but exempt oil and energy companies from applying it to their own tax returns.

Guess who pays for the higher costs? Hint: It’s not the CEO. The tax credit on foreign taxes paid will force US producers in both industries to raise prices to meet the costs of the loss of the credit. Since energy prices are a multiplier in the distribution chain (each player in the chain will have to add the higher energy costs incurred to bring goods and services to market), this will be both inflationary and regressive. Those with fewer discretionary dollars will feel the impact the most, just as with cap-and-trade, and for the same reasons. Higher prices also mean that American producers will be less competitive in global markets, and that means lower revenues and loss of jobs.

Earlier today on The Ed Morrissey Show, I spoke with Pete Sepp about the tax proposals. We both agree that this is just the start; if Congress gets these tax proposals in place, the oil and energy industries won’t be the only sectors to have the grasping hands of Congress go deeper into their pockets. Be sure to watch, and to follow at NTU for more developments as they come.


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Go for it.

40 seats in the house.

60 seats in the house.

fogw on September 2, 2010 at 7:04 PM

The federal government needs to cut its spending by 45-60 percent before they should be allowed to even discuss any new taxes.

Inanemergencydial on September 2, 2010 at 7:05 PM

Wake me up when we get to the “They’ve run out of other people’s money” stage. I’m going to go cry myself to sleep.

Is there any stopping them?

skree on September 2, 2010 at 7:05 PM

“Doing what they can, the Democrats continue to attempt to destroy the US Business and Financial infrastructure by any means possible…”

WhoU4 on September 2, 2010 at 7:06 PM

What little I could stand of the Boxer/Fiorina debate it was clear that Boxer was running on an anti-business platform.

If republicans want gains in congress republicans must be prepared to defend business, and profit, and explain why a profitable business is something good, not something evil.

It is profit that pays good wages. It is profits that invests in new equipment. It is profits that discovers new methods and products. If republicans can’t defend this, they won’t be any help to us.

Skandia Recluse on September 2, 2010 at 7:07 PM

How else will they sell the Volt?

fourdeucer on September 2, 2010 at 7:08 PM

I’m going to go cry myself to sleep.

Is there any stopping them?

skree on September 2, 2010 at 7:05 PM

Apparently you have not heard of the “sleep tax”…the longer you sleep, the more you pay taxes…compounded by the “tears tax”.

right2bright on September 2, 2010 at 7:08 PM

You can move those HQ’s to Alberta – Calgary or Edmonton (although more likely Calgary), we’ll be happy to take you in to get you away from the Dems!

/flees

Karthanon on September 2, 2010 at 7:10 PM

I hope it’s quite obvious to everyone by now that Obama’s “fundamental transformation” is to be accomplished through a complete economic collapse of the US. These people are evil.

darwin on September 2, 2010 at 7:11 PM

Great, just add to the Stagflation. Since it takes energy to run everything the price of all goods will go up. Feeding inflation, causing unemployement, and

Oil Can on September 2, 2010 at 7:14 PM

As the NTU points out, eliminating the Section 199 tax credits removes incentives for American companies to keep jobs at home

Cloward-Piven

macncheez on September 2, 2010 at 7:15 PM

“Pakistan has a lot to learn. In the US, if it moves we tax it. If it sits still, we tax it. (giggle)”

/paraphrase

SoS Hillary Clinton

GnuBreed on September 2, 2010 at 7:16 PM

Expect another Facebook post from Sarah Palin very, very soon.

technopeasant on September 2, 2010 at 7:16 PM

Some days I wonder…is this Obama’s plan? Does he WANT to destroy America? That is the only reason why I can see him destroying all of these jobs!

Cookies Mom on September 2, 2010 at 7:17 PM

Sure, because nothing says grow the economy like taxing the energy you need to run the economy and raising the price of every manufactured product and every service provided to everyone in the country while simultaneously raising the cost of living for everyone in the country. Good plan.

Good Lord.

mchristian on September 2, 2010 at 7:17 PM

It’s about fairness…

Scrappy on September 2, 2010 at 7:22 PM

Why not send a tax collector around door to door?

Oh yea, not wise..same thing though.

Speakup on September 2, 2010 at 7:25 PM

I thought Democrats weren’t anti-capitalist? After all, crr6 told me so earlier this week.

Del Dolemonte on September 2, 2010 at 7:25 PM

Does he WANT to destroy America? That is the only reason why I can see him destroying all of these jobs!

Cookies Mom on September 2, 2010 at 7:17 PM

Cloward-Piven. Look it up. A strategy to transform America by collapsing it from the inside and rebuilding it into a Marxist uptopia.

darwin on September 2, 2010 at 7:30 PM

Guess who pays for the higher costs?

Cousin Pookie will get the money from Obama’s stash.

trubble on September 2, 2010 at 7:32 PM

Cloward-Piven
macncheez on September 2, 2010 at 7:15 PM

THIS is why Obama needs to destroy Glenn Beck and his goofy blackboard.

Obama’s banking on such an evil intent taking so long to sink in with the gullible electorate that it will just be too. damn. late.

marybel on September 2, 2010 at 7:33 PM

What’s next? The fart tax? Everyone farts, think of the money they will pull in. Jeebus these people need to be removed from power post haste.

milwife88 on September 2, 2010 at 7:35 PM

Obama said that he was going to do this when he campaigned for precedent the first time. (he’s still campaigning, I know)

darwin-t on September 2, 2010 at 7:38 PM

Let me be perfectly clear, energy prices will necessarily skyrocket.

Lily on September 2, 2010 at 7:42 PM

They won’t stop until they’ve strangled the goose that lays the golden eggs.

ZenDraken on September 2, 2010 at 7:44 PM

They are truly insane.

This will not stand, ya know, this aggression will not stand, man.

tru2tx on September 2, 2010 at 7:46 PM

They won’t stop until they’ve strangled the goose that lays the golden eggs.

ZenDraken on September 2, 2010 at 7:44 PM

I think that goose is on the table as we speak.

Merovign on September 2, 2010 at 7:46 PM

You can move those HQ’s to Alberta – Calgary or Edmonton (although more likely Calgary), we’ll be happy to take you in to get you away from the Dems!

/flees

Karthanon on September 2, 2010 at 7:10 PM

Or to Dubai, as Halliburton did. I work for a major oil company (geologist), and frankly, I wouldn’t mind Calgary. Nice town, I’ll be up there later this month. How are the winters?

iurockhead on September 2, 2010 at 7:51 PM

They know they’re gonna get their asses kicked in November, so they’re looking at the following two lame duck months as the time to ram through as many screw-you-America bills as they can.

infidel4life on September 2, 2010 at 7:59 PM

Geeeeeeze Dems! Just say it already. We don’t like our jobs, and want to be voted out!!!

capejasmine on September 2, 2010 at 7:59 PM

The track on the right bends out about one foot. The one on the left about two feet. That train has fixed wheels.

Limerick on September 2, 2010 at 8:04 PM

Popcorn $3.75. Beer to flush it down as you watch the train $5.00.

Limerick on September 2, 2010 at 8:07 PM

My hometown’s population fluctuates by the tens of thousands depending on the price of oil. If this goes through, Southeast New Mexico and West Texas will be annihilated. It’s the only industry in these areas. At least most other oil-producing areas have other industries to make up some of the slack. Entire cities thrive on oil and gas production, and they’re well paying jobs! When the oil money leaves, so does the income to support the rest of small businesses (i.e. retail), which leads to even more unemployed people. This will toss people into the unemployment lines at Mach speed. Liberals simply refuse to consider the domino effect of their actions.

This is all part of the plan. I would never have guessed the President of the United States and Congress would actively and purposefully work to destroy American exceptionalism and the American worker. If there was any doubt whatsoever that this is all intentional, it’s gone now.

nmlaw2012 on September 2, 2010 at 8:07 PM

nmlaw2012 on September 2, 2010 at 8:07 PM

But it is the only way to get us to buy that $57,000 hybrid from Gov’t Motors.

Limerick on September 2, 2010 at 8:10 PM

You can move those HQ’s to Alberta – Calgary or Edmonton (although more likely Calgary), we’ll be happy to take you in to get you away from the Dems!

/flees

Karthanon on September 2, 2010 at 7:10 PM

Exactly. Exxon-Mobil could become a foreign company in a month. If companies start leaving the USA like they are leaving California (same reasons) will the democratics see that as victory or defeat?

slickwillie2001 on September 2, 2010 at 8:13 PM

But it is the only way to get us to buy that $57,000 hybrid from Gov’t Motors.

Limerick on September 2, 2010 at 8:10 PM

Hybrids still need fuel! Not to mention $57,000 is more than the yearly income of most Americans. The daily tax assault on the American worker and corporation is beyond depressing.

nmlaw2012 on September 2, 2010 at 8:14 PM

I can see it now:

Exxon, LTD
GE, GmBH

Good job Nanzi, B+.

BobMbx on September 2, 2010 at 8:16 PM

Exactly. Exxon-Mobil could become a foreign company in a month. If companies start leaving the USA like they are leaving California (same reasons) will the democratics see that as victory or defeat?

slickwillie2001 on September 2, 2010 at 8:13 P

Between the moratorium in the Gulf that this administration KNEW would cost thousands of jobs, and this, I am sad to say I think it’s the former.

nmlaw2012 on September 2, 2010 at 8:17 PM

Come wid it, Dems!

SilentWatcher on September 2, 2010 at 8:21 PM

The donks have to pay for that Sept 2012 stimulus check being dropped in your mailbox so give them at least credit for looking out for you!

Limerick on September 2, 2010 at 8:22 PM

Go for it.

40 seats in the house.

60 seats in the house.

fogw on September 2, 2010 at 7:04 PM

Ya know, I’m just about at that point too. Bring on the destruction, Obama. We will survive it. But the left in this country will be destroyed by your wreckage for decades to come.

petefrt on September 2, 2010 at 8:36 PM

OK, then: dig faster, please.

karl9000 on September 2, 2010 at 8:45 PM

Some days I wonder…is this Obama’s plan? Does he WANT to destroy America? That is the only reason why I can see him destroying all of these jobs!

Cookies Mom on September 2, 2010 at 7:17 PM

In case you haven’t noticed it isn’t just Obama it’s the entire Democrat party. He just signs what they pass. They all must go.

whbates on September 2, 2010 at 9:24 PM

“Even BP…” and it shows a grease-drenched pelican with bulging black eyes. What an optic!

leftnomore on September 3, 2010 at 12:43 AM

Good for them! The ad in Washington specifically goes after Patty Murray!

jdawg on September 3, 2010 at 1:15 AM

However, this new “double tax” would apply only to energy providers here in the U.S. – meaning state-owned companies in countries like Venezuela and China will effectively receive a competitive edge over American firms.

Competitive advantage for Hugo Chavez and BP. Yea, that’s the way to win back moderate voters (the Smartest Life Forms In The Universe obviously thought “Hey! People still hate big oil companies! Let’s tax them!” without ever thinking about the non-U.S. firms that would stand to benefit from the change in the law. It’s similar to how the Carter-era law allowing tax breaks for U.S. production wells on the North Slope of Alaska ended up benefiting BP, which had just bought Atlantic Richfield and — with the largest share of the Prudhoe Bay Field — were able to undercut U.S. oil companies on their gasoline prices during the post-Iranian revolution spike in gas prices in 1979).

jon1979 on September 3, 2010 at 1:29 AM

It makes perfect sense from their POV.

They view the United States as Godzilla, a mindless monster out to destroy the world. To save the world, they must destroy the United States.

Most Toho monster movie plots revolve around depriving the monster of energy in one form or another, once they’ve run out of Japanese Self-Defense Forces units for the monster to destroy (which makes up about half the movie on average).

Also, the policy of the GOP in the Reagan years was to reduce the size of government by “starving the beast”, i.e. reducing the government’s available money and focusing what was left on fundamental functions like national defense. The progressives hated that, and hated Reagan for doing it (in fact, they hate him to this day). But they did learn a lesson from that- and from monster movies.

To destroy the monster, starve it of energy.

And to them, we, America, are the monster.

As with so many things about the “progressives”, it’s easy to figure out, once you break the code.

clear ether

eon

eon on September 3, 2010 at 8:32 AM

The oil moratorium isn’t selling enough electric roller skates called Volts now they have to tax energy out of business. He did say our electric bills would necessarily skyrocket.

Kissmygrits on September 3, 2010 at 9:11 AM

Or to Dubai, as Halliburton did. I work for a major oil company (geologist), and frankly, I wouldn’t mind Calgary. Nice town, I’ll be up there later this month. How are the winters?

Geez, you had to ask about winter, eh? :)

In Calgary it’s more endurable than Edmonton, at least. Chinooks, you see. Plus the mountains are right there..

Karthanon on September 3, 2010 at 10:18 AM

An auto-play video of your radio show Ed?

REALLY?

Sinner on September 3, 2010 at 10:57 AM

The elites want to de-develop the West.
vanishing upward mobility:

Broad-based economic growth might seem the most logical solution to this dilemma. In the past, socialists, liberals, and conservatives might vigorously have debated various approaches, but generally agreed about the desired end result: shrinking slums and expanding opportunity for the middle or working class. Today, however, many urban “progressives” do not trouble themselves overmuch about the hoi polloi. Instead, they are more likely to devise policies to lure the much-ballyhooed “creative class” of well-educated, often childless, high-end workers to their cities. This goes along as well with an increased focus on aesthetic and “green” issues.

In many ways, these approaches actually work at cross-purposes with upward mobility. Green-oriented policies are often hostile to “carbon intensive” industries such as manufacturing, warehousing, or construction that employ middle-income workers. Green policies implicitly tilt towards industries such as media, entertainment, and finance that employ the best-situated social classes.

Indeed, some climate change enthusiasts, such as The Guardian’s George Monbiot, see their cause in quasi-religious terms. In Monbiot’s words, he is waging “a battle to redefine humanity.” In his view, we must terminate the economic “age of heroism,” supplanting the “expanders” with anti-growth “restrainers.”

This is not just the latest edition of British “loony Left” thinking. President Obama’s own science advisor, John Holdren, long has embraced the notion of what he calls “de-development” of Western economies to a lower level of affluence. Such approaches impose enormous costs on both the middle and working classes in European and North American cities, particularly given the unlikelihood of similar restrictions on competitors in China, India, Russia, and other countries. A huge shift to renewable fuels, for example, could quadruple the cost of energy in Britain, forcing a large percentage of the population into “fuel poverty.”

LarryD on September 3, 2010 at 11:12 AM