Taxes and the oil and natural gas industries

Poll: by two to one, Americans oppose new oil and natural gas industry taxes, most cite job loss fears

Americans overwhelmingly oppose raising taxes on America’s oil and natural gas industry, and most believe it could kill jobs, according to a survey commissioned by API and conducted by Harris Interactive this month by telephone. Among those responding to the survey, 62% opposed an increase in taxes on the industry, and 60% said it could destroy jobs.

‘Voters fear that raising taxes on an industry that provides most of their energy and supports more than 9.2 million jobs would hurt them and damage the economy,’ said API President and CEO Jack Gerard. ‘They think it could cost jobs, and that’s exactly what two recent studies show.’

Based on a Wood Mackenzie analysis of production impacts from eliminating the manufacturing and intangible drilling cost tax deductions for the oil and natural gas industry, API calculated 58,800 jobs would be put at risk in 2011 and 165,000 in 2020. A separate study of the impacts of ending the manufacturing tax deduction and increasing taxes on the industry’s foreign earned income by Louisiana State University professor Joseph Mason concluded that 154,000 jobs could be lost in 2011.

The US oil and natural gas industry is one of the nation’s biggest tax payers. According to the US Energy Information Administration, the industry paid almost US$ 100 billion in federal income taxes in 2008. A review of Compustat data shows that the oil and natural gas industry had an effective average tax rate of 48.4% in 2009 compared with 28.1% for the rest of S&P industrial companies.

API pleased Senate votes down flawed tax amendment

The American Petroleum Institute is pleased the Senate failed to approve Senator Bill Nelson’s amendment, which sought to rescind a job creating tax provision (Section 199) for a handful of oil and natural gas companies, according to API Tax manger Stephen Comstock.

‘We are pleased the Senate failed to approve this shortsighted amendment that sought to unfairly repeal a job creating tax provision for a handful of oil and natural gas companies. Had it passed, the provision would have raised taxes and killed jobs, something the nation cannot afford, especially when so many Americans are out of work.’

‘While we are disappointed that the Senate was unable to fix the 1099 reporting requirements in the small business bill with an amendment offered by Senator Mike Johanns, we are pleased the majority turned back the effort to increase taxes on the oil and natural gas industry, which ultimately could have cost American jobs.’

Published on 17/09/2010

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