Exactly what the US doesn’t need,
Congress’s Hugo Chávez Bailout Bill
Proposed changes to the tax code would cost U.S. jobs and strengthen foreign competitors like China and Venezuela.
Research I’ve recently published indicates that under the administration’s six-month moratorium, set to last until Nov. 30, the Gulf Coast region will lose more than 8,000 jobs, nearly $500 million in wages, over $2.1 billion in economic activity, and nearly $100 million in state and local tax revenue. Taking into account the effects outside of the Gulf Coast, the moratorium will cost the United States 12,000 jobs and nearly $3 billion, including almost $200 million in federal tax revenues.
If the moratorium lasts six to 12 months longer, as many pundits expect, some 36,000 jobs could be lost across the country. Under the worst case scenario—a permanent moratorium on all oil and natural gas production in the Gulf of Mexico—nationwide economic losses would exceed $95 billion and more than 400,000 jobs.
This is bad enough. But earlier this week, both the House and Senate proposed new energy bills that will cost $25 billion and $15 billion, respectively—and the government wants the energy sector to pay the tab. The administration and its congressional allies are considering two changes to the tax code that would put U.S. energy companies at a competitive disadvantage to foreign-owned behemoths like BP, China’s Sinopec and Hugo Chávez’s Citgo. These constraints on the energy sector would handcuff domestic energy development, reduce future resources, and kill even more jobs.
In his 2011 budget proposal to Congress, President Obama seeks to repeal the “dual capacity” tax credit, under which American businesses with operations overseas receive a deduction on their U.S. taxes relative to the amount of taxes they have already paid other countries. This credit guarantees that the revenues of U.S. companies aren’t taxed twice. The U.S. is the only country that taxes foreign revenues in the first place, so the dual capacity credit allows U.S. companies to compete fairly against foreign competitors. Doing away with it would dramatically disadvantage American firms relative to their foreign rivals.
Mr. Obama’s budget, as well as the bills under consideration in the House and Senate, would further hurt the energy sector by excluding it from a critical tax deduction, known as Section 199, which allows firms to deduct a percentage of domestic production activity each year. Enacted in 2004 as part of the American Jobs Creation Act, Section 199 was meant to encourage employment across the entire manufacturing sector, including oil and gas. Under Mr. Obama’s budget, however, Section 199 would no longer apply to oil and gas companies.
According to analysis conducted for the Institute for Energy Research by the economist Andrew Chamberlain, this repeal would cause the U.S. to increase its reliance on imported oil from politically unstable nations, cost the economy 637,000 jobs, and reduce household earnings by nearly $35 billion over the next decade. As the Congressional Research Service recently put it, repeal would “adversely affect domestic production and increase imports.”
Change.
You asked for it, you got it.
(thanks to Emily & Maggie for the link)
