While the nation struggles with gas prices hovering at $4 per gallon, our representatives in Washington are so busy pointing fingers at each other they have failed to take the necessary, prudent steps that would address the problem: chief among them, carefully allowing more domestic production to stabilize oil markets.
The President, focused on his 2012 re-election campaign and nervous about upsetting a vocal portion of political allies in his base, is instead trying to blame the very energy companies whose production his policies are limiting. Others, including many Republicans (and a significant number of Democrats) are seeking to expand U.S. oil and gas development, and with it the chance for a robust, job-creating economic recovery.
Though the political rhetoric is difficult to cut through, from the taxpayer’s standpoint the solutions are clear, and so are the consequences of legislative missteps.
One such blunder would be to heed the Administration’s call for new taxes on energy companies, a message it peddles under the guise of eliminating “subsidies.” For a brief period, even the Speaker of the House seemed receptive to the President’s line, but taxpayers shouldn’t buy this snake oil.
The President’s budget (as well as legislation being crafted in Congress) would deny “dual capacity” protection against double-taxation on oil and gas companies’ earnings from abroad, where they operate to secure energy resources in constant competition with other countries’ firms. This provision helps to offset America’s overly complex and burdensome corporate tax system.
According to the “Paying Taxes 2011” rankings published by PricewaterhouseCoopers and the World Bank Group, the U.S. places a dismal 124th out of 183 countries for total tax rate on a typical company. Contrary to political spin, our oil and gas industry often bears the worst of this burden, averaging a 48 percent tax load as a share of profits (well above that of most sectors). The easiest way out of this mess is tax reform for all businesses. But singling out American oil and gas companies by removing their dual capacity shield, while leaving the rest of flawed tax system in place, would be a crippling blow to U.S. energy diversity.