Posted on 09/15/2010 8:35:27 AM PDT by epithermal
This article was updated on Sept. 15 to reflect legislative developments.
By OGJ editors HOUSTON, Sept. 14 -- Proposals by the Obama administration to kill two tax provisions important to oil and gas companies would do economic harm worth more than the revenue they would raise for the government, according to a study commissioned by the American Energy Alliance.
Louisiana State University Prof. Joseph R. Mason, who conducted the study, concludes that ending “dual-capacity” tax provisions and denying oil and gas companies use of a tax deduction available to other industries since 2004 “could cripple the oil and gas sector.”
Under current dual-capacity tax law, companies with income outside the US can lower US income taxes by the amounts they pay in income taxes to other governments. The administration proposes to adjust dual-capacity rules so as to slash the value of the credit.
The move would impose double-taxation on much foreign income and hurt the abilities of international oil companies based in the US to compete abroad.
The other proposal would prevent US oil and gas companies from using a deduction enacted in Sect. 199 of the American Jobs Creation Act of 2004 to bring overall tax rates of US manufacturers in line with those of non-US competitors.
Together, Mason says, the moves would cut US economic output by $341 billion and wages by almost $68 billion over the next decade. They would eliminate 154,000 jobs in 2011 and a further 115,000 jobs over the rest of the decade.
Mason points out that the losses he projects exceed the $210 billion that some analysts have estimated would flow to the US Treasury as a result of the tax changes.
And Mason says those analyses don’t account for “the inexorable reality that US corporations will respond to higher taxes by restricting domestic production and moving operations elsewhere in the world.”
The Senate on Sept. 14 rejected an attempt by Sen. Bill Nelson (D-Fla.) to deny use by the five largest oil companies of the Sect. 199 deduction. Nelson made his proposal as an amendment to legislation to provide incentives to small businesses.
Bush’s Fault ... Jeb, that is. He chose not to oppose Nellie and take the seat away from the RATs.
If taxes don’t get the job done, excessive regulation will.
And all the extra cost will be paid by the consumer. People are such morons. They think “big oil” is gonna get it, when they will be the ones paying higher prices for energy. Of course, then they will just blame “big oil” again. *sigh*
Under current dual-capacity tax law, companies with income outside the US can lower US income taxes by the amounts they pay in income taxes to other governments.
Well that's certainly stupid.
Why should American taxpayers subsidize foreign taxation by giving them a tax break here?
These scoundrels contaminate our food and water supply and corrupt our political system.
They undermine the traditional American values that are being lost in our nation.
I see no reason to show any compassion towards this indusrty.
Madison was correct, of course in understanding that commerce may only flourish when the law is fair and impartial and not subject to the designs of government bodies eager to extend their power and wherever possible, to extract tribute. When the British crown imposed a stamp tax upon a variety of goods imported to the colonies, it not only violated the colonists’ rights to representation but impeded their ability to exercise commercial enterprises by which they might prosper. Hence: the Tea Parties. They are needed for essentially the same reasons today.
bookmark.
They aren't. You have to declare money you earn outside the US on your US taxes, but you get to deduct the taxes you already paid on that external income so you don't get taxed twice on the same income.
I think that loophole should be closed.
It isn't "double taxation" if the taxes are paid to two entirely separate governments.
That arguement is B/S.
It's merely the cost of engaging in international business.
Each government is entitled to it's full share of legal taxation without these sleazy traders pitting one government against each other for the best "deal" until the slippery ba$tards wind up paying taxes to nobody.
If I remember correctly we have the second highest business taxes in the world. So you have to declare the income you made elsewhere, but only get to deduct the taxes you paid there, not the tax higher amount of taxes you would have paid here. Therefore you get to pay the difference between their tax rate and our higher tax rate here.
It is generally safe to assume that if you think the IRS is offering you and advantage, you just don’t understand how you are getting screwed.
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