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The Taxing Jobs Bill

The opinions expressed by columnists are their own and do not necessarily represent the views of

With Obama pushing Republicans to stop blocking a new “jobs bill,” it’s important to take a look at one important provision in it: a new tax on the oil and gas industry, which could set a dangerous precedent for punishing industries that happen to have fallen out of favor in the public eye.

“[The precedent] is one that you can see politicians using down the road to punish disfavored industries, whether its McDonalds or Pepsi, or Smith and Wesson,” said Scott Hodge, President of the Tax Foundation. “The oil industry is the latest whipping boy for this administration.”

The tax would be installed by reversing a tax exemption that has been in place since 2004, which benefits all domestic manufacturing. Only oil and natural gas companies would be subject to the reversal – the rest of the manufacturing sector is left untouched. Democrats, led by Senate Finance Committee Chairman Max Baucus (Mo.), claim that effectively raising the price of oil is being done to decrease oil and gas consumption and curb greenhouse emissions.

But that logic is unbelievable, said Hodge. The manufacture of just about everything creates more greenhouse gases, and there have been no moves to reverse the tax credit for automobile manufacturers, road construction, or anything else. It’s a total farce.

Don’t tell that to the environmental lobby, of course. One biofuels company recently decried the tax exemption as “subsidizing” oil and gas, something that “makes it harder for renewable energy sources to compete on price.”

Perhaps the answer to that is to reduce taxes and tax breaks across the board, but that’s not even the purpose of the jobs bill that’s currently being considered. This bill spends $30 billion to make more cash available for small business loans, and tackles a host of other economic issues that should theoretically have nothing to do with the oil and gas industry.

The oil tax provision, for example, was slipped in as a substitution to an amendment introduced by Sen. Mike Johanns, (R-Neb.), which tried to reduce paperwork and cut red-tape for the opening and operation of small businesses in the U.S. Johanns paid for this measure by eliminating a $15 billion “Prevention Trust Fund,” which funds things like anti-smoking and anti-obesity campaigns.

The big question is whether the current incarnation of the bill is pushed forward. Hodge believes it’s very high that it could.

“I think they’re looking to put a scalp on the wall before the election,” he said.

Senate Minority Leader Mitch McConnell (R-Ky.) made similar remarks to Politico yesterday.

"We first got on this bill in late June, and since then, Democrats have set it aside six separate times to move to something else—we’ll take it up again in September when the Senate returns,” said McConnell. "So from the beginning this bill clearly wasn’t a priority to them—until they realized that they didn’t have anything to talk about when they go home in August."

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