ATR Encourages Congress to Debate S.2204
ATR sent the following letter to the Senate; click here for a PDF file of the document:
26 March 2012
Senator Robert Menendez (D-NJ) has a truly awful piece of legislation: S. 2204. It will increase taxes on Americans. It will increase the price of gasoline at the pump and the cost of heating your home. It increases total taxation of Americans by more than $12 billion over the next decade in addition to Obama’s looming tax hikes.
This legislation is so bad it deserves to be debated before the entire nation on CSPAN.
Americans for Tax Reform urges all pro-taxpayer Senators to vote to proceed to consider S.2204 which will trigger a 30 hour period of debate on Menendez’s efforts to raise taxes and increase gasoline prices.
ATR then urges all pro-taxpayer Senators to vote “no” on any motion to cut off debate and proceed to a vote. Those Senators who have signed the Taxpayer Protection Pledge will clearly keep their written commitment to taxpayers if they vote to allow debate and then vote no on efforts to actually enact Menendez’s gas price increasing tax hikes.
Fewer jobs, less energy
Unable to adequately recover their investment costs, oil and natural gas producers will be forced to scrap or delay future projects. S. 2204 will cause layoffs, reduce domestic oil production, and cripple American companies abroad. With the global supply of oil tightening, Congress should be encouraging American oil production, not crippling the industry through tax increases.
Time and time again, Democrats argue that oil and natural gas companies are the recipients of numerous “subsidies.” This couldn’t be farther from the truth—oil and natural gas companies don’t receive a single cent from the American government to produce oil and gas.
President Obama and his Party have regularly asked Congress to “close tax loopholes,” and yet S. 2204 further muddles our tax code by reauthorizing a slew of tax credits for Democrat-favored industries. S. 2204 is proof that Democrats are not committed to tax reform, nor do they have a consistent idea of what tax reform even is. Unlike, Democrats’ distortive policies, 26 Republican Senators expressed their commitment to true tax reform by voting for Sen. DeMint’s amendment to repeal energy tax credits and lower the corporate tax rate by an identical amount.
Democrats’ antagonistic stance towards oil and natural gas companies is antithetical to tax policies they advocated for just last year. Arguing that full business expensing creates jobs by lowering companies’ investment costs, Obama championed this policy for small businesses. Attempting to score political points, Democrats are uniformly fixated on repealing these tax policies for oil and natural gas producers. The benefits of faster cost recovery are never more evident than in the capital intensive oil and natural gas industry.
Washington’s overspending problem
As many Americans now understand, this country doesn’t have a revenue problem, we have a spending problem. Showing no interest in seriously reducing spending, Democrats are asking for America’s job creators to prop up a bloated federal government.
It is for these reasons that I urge you encourage debate and then to oppose passage of S. 2204.
Grover G. Norquist
CAP Blames Oil Companies for the World's Problems
In typical Center for American Progress (CAP) partisan fashion, Daniel Weiss manages to blame oil companies for the price of gasoline, America’s overspending problem, the inefficiency of biofuels, and for not drilling on land the federal government refuses to lease. But don’t let ‘em off so easy, Mr. Weiss, oil and natural gas producers are also responsible for the Iraq war, world hunger, and that time I wrecked my ATV and broke my arm (it was powered by gasoline!). The genesis of Mr. Weiss’s stream of consciousness post is both the Paul Ryan budget, which preserves standard expensing provisions for oil and natural gas producers, and Sen. Menendez’s reintroduction of his humorously titled “Close Big Oil Tax Loopholes Act”.
Grasping at air, Mr. Weiss concludes that the “the Ryan budget compounds the cost of high oil and gasoline prices on the middle class” because the budget appropriately eliminates Solyndra-like government spending on biofuels which, one day, might be able to displace America’s oil consumption. Mr. Weiss misses the joke that reducing government spending mitigates the government’s burden on the middle class. While ATR and Mr. Ryan argue that the government has no business helping companies turn algae into something you can put in your gas tank, no one seriously believes that biofuels will alleviate consumers’ pain at the pump anytime soon.
What would, in fact, “compound the cost of high oil and gasoline prices on the middle class” is exactly what CAP, Obama, and Sen. Menendez are proposing: raising taxes on oil and natural gas producers to the tune of $40 billion. When you tax something you get less of it—“it” in this instance being jobs, economic productivity, and oil. For a more nuanced explanation, I refer readers to an American Petroleum Institute commissioned study.
ATR has written extensively about the gimmicks CAP uses to scapegoat oil and natural gas companies as tax dodgers, a narrative The Wall Street Journal highlights in a recent editorial. From the WSJ:
Here's a staggering fact: The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders.
Exxon Mobil, the world's largest oil and gas company, says that in the five years prior to 2010 it paid about $59 billion in total U.S. taxes, while it earned . . . $40.5 billion domestically. Another way of putting it is that for every dollar of net U.S. profits between 2006 and 2010, the company incurred $1.45 in taxes. Exxon's 2010 tax bill was three times larger than its domestic profits. The company can stay in business because it operates globally and earned a total net income after tax of $30.5 billion in 2010 on revenues of $370.1 billion.
Crunching Compustat North America numbers, API estimates that the average effective tax rate for oil and gas companies is 41.1% for 2010—i.e., taxes as a share of net income. That is broadly in line with the Energy Information Administration's estimates for "major energy producers." By the same measure, other manufacturers on the S&P Industrial index pay an effective rate of 26.5%.
I’d encourage everyone to read this great piece. But you get the point, oil and natural gas producers pay a lot in taxes. Mr. Weiss also blames oil companies for not creating more jobs, which is silly, since the Obama Administration has made it nearly impossible to do so by delaying or cancelling lease sales and drilling permits. Mr. Weiss is trying to have his cake and eat it too; his endgame is less American oil and natural gas production which consequently leads to, you guessed it, fewer jobs. That’s like blaming oil companies for not building the Keystone pipeline, which Obama killed.
There are a lot of reasons why gasoline is so expensive these days, but the Obama Administration has done little, if anything, to alleviate consumers’ pain at the pump. Conversely, Republicans have rightly proposed increased oil and natural gas production which would create hundreds of thousands of jobs and add billions of barrels of oil to the world marketplace.
ATR urges Representatives to cosign Flake's PTC letter
15 March 2012
On behalf of Americans for Tax Reform (ATR), and millions of taxpayers nationwide, I urge you to cosign Rep. Flake’s Dear Colleague which asks Congress to let current law run its course by allowing the Production Tax Credit (PTC) for renewable energy sources to expire on December 31, 2012.
Allowing the PTC to lapse is not a tax increase as it was never intended to be permanent. The 112th Congress is under no obligation to extend temporary tax policy; simply because the PTC is law in 2012 does not justify the tax credit’s existence indefinitely. The PTC was originally introduced to facilitate a fledgling industry. Since then, the wind industry has sufficiently matured and its power generation is even mandated in numerous states.
ATR supports immediate elimination of the PTC so long as the tax increase is offset by an equal or greater tax cut. Embracing this pro-growth tax reform strategy, Rep. Pompeo has introduced the Energy Freedom and Economic Prosperity Act which eliminates every energy tax credit and reduces the corporate tax rate by an equal amount. The PTC disadvantages energy consumers by skewing America’s energy market, propping up an inefficient industry, and distorting our tax code.
Originally introduced under the Energy Policy Act of 1992, the PTC was expanded to include wind production under the 2005 American Jobs Creation Act. By claiming the PTC in excess of $1 billion annually, the wind industry has come to depend on the 2.2 cent per kilowatt-hour tax credit.
Relying so heavily on the PTC, the wind industry has put Congress in the awkward and ill-suited position of deciding whether Americans will consume more or less wind energy. America’s energy markets are enormously complex systems which function most efficiently without government’s distortive policies.
Proponents of the PTC extension tout potential job creation and warn of possible job losses should Congress fail to reauthorize the PTC. However, many of the studies cited by PTC advocates ignore job losses in other industries that produce and transport coal and natural gas. Similarly, since wind is less efficient than traditional forms of energy, further reliance on wind will likely increase employers’ electricity bills and also induce layoffs.
Given wind energy’s cost and inability to consistently generate power, it is unsurprising that this energy source supplies less than 3 percent of America’s electricity needs.
Burdened with political considerations, the federal government is ill-equipped to determine what source of energy Americans should use. With the PTC set to expire at the end of this year, Congress has a great opportunity to clean America’s tax code and begin peeling back government’s distortive policies—simply by taking no action.
Grover G. Norquist
ATR will Keyvote DeMint and Menendez/Burr Amendments, Oppose Stabenow
A “Yea” vote on Sen. DeMint’s amendment #1589 will be scored positively on Americans for Tax Reform’s congressional rankings:
DeMint amendment #1589 (creates a fair energy market through tax reform): Modeled after Reagan’s 1986 tax reform, the DeMint amendment repeals energy tax credits and reduces the corporate tax rate by an equivalent amount. Burdened with political considerations, the federal government is ill-equipped to determine what source of energy Americans should use. Determined not to pick winners and losers, the DeMint amendment eliminates tax credits from a score of industries—from oil and natural gas companies to wind producers. A win for consumers, the DeMint amendment ensures that the most efficient, reliable, and cleanest form of energy is produced and utilized.
A “Nay” vote on Menendez/Burr amendment #1782 will be scored positively on Americans for Tax Reform’s congressional rankings:
Menendez/Burr amendment #1782 (NAT GAS Act): Congress and regulatory agencies have piled on rules and regulations in an attempt to nudge, or force, Americans to use lawmakers’ preferred energy sources. Republicans who wish to facilitate natural gas production need not support Menendez/Burr; the amendment does nothing to alleviate many supply-side concerns conservatives have. Instead, Menendez/Burr inequitably gives certain natural gas consumer an advantage over other natural gas consumers while implementing a user fee on other natural gas consumers.
Conservatives should begin peeling away the government’s consumption mandates and tax policies, not piling on more rules. Unfortunately, the NAT GAS Act takes the opposite approach—further skewing the market, inflating natural gas consumption, and potentially driving up the cost of natural gas.
Americans for Tax Reform strongly urges Senators to oppose the following amendment:
Stabenow amendment #1812 (wind tax credits): The Production Tax Credit was originally introduced to facilitate a fledgling industry. Since then, the wind industry has sufficiently matured and its power generation is even mandated in numerous states. Congress should not be in the business of propping up or aiding one source of energy over another. Given wind energy’s cost and inability to consistently generate power, it is unsurprising that this energy source supplies less than 3 percent of America’s electricity needs.
Surface Transportation Energy Amendments
Americans for Tax Reform strongly urges Senators to support the following amendments:
1. Vitter amendment #1535 (domestic energy development): Spurring economic activity, creating thousands of jobs, and increasing domestic energy production, Sen. Vitter’s amendment would restore the Department of Interior’s 2010-2015 lease plan. In 2008, a bipartisan agreement was reached to lift the decades-long congressional ban on new offshore drilling and open new reserves off the Atlantic, Pacific and Arctic coasts. It is important to note Congressional democrats were in control of both houses when legislation was passed lifting the moratorium in nearly all our offshore resources.
2. Hoeven amendment #1537 (Keystone Pipeline XL): Given the Obama Administration’s repeated attempts to block construction of the pipeline—and the thousands of jobs, increased energy security, and economic activity tethered to the project—Congress must approve the Keystone Pipeline. Studied and reviewed for nearly three years, the Keystone Pipeline has been thoroughly vetted by numerous federal agencies and successfully made its way through the federal rigmarole.
3. DeMint amendment #1589 (creates a fair energy market through tax reform): Modeled after Reagan’s 1986 tax reform, the DeMint amendment repeals energy tax credits and reduces the corporate tax rate by an equivalent amount. Burdened with political considerations, the federal government is ill-equipped to determine what source of energy Americans should use—the DeMint amendment ensure that the most efficient, reliable, and cleanest form of energy is produced.
4. Collins amendment #1660 (Boiler MACT): The Collins amendment would require the Senate to rewrite the onerous, job killing Boiler MACT rule.
Americans for Tax Reform strongly urges Senators to oppose the following amendments:
1. Menendez/Burr amendment #1782 (NAT GAS Act): Congress and regulatory agencies have piled on rules and regulations in an attempt to nudge, or force, Americans to use lawmakers’ preferred energy sources. Conservatives should begin peeling away the government’s consumption mandates and tax policies, not piling on more rules. Unfortunately, the NAT GAS Act takes the opposite approach—skewing the market, inflating natural gas consumption, and potentially driving up the cost of natural gas.
2. Stabenow amendment #1812 (wind tax credits): The Production Tax Credit was originally introduced to facilitate a fledgling industry. Since then, the wind industry has sufficiently matured and its power generation is even mandated in numerous states. Congress should not be in the business of propping up or aiding one source of energy over another. Given wind energy’s cost and inability to consistently generate power, it is unsurprising that this energy source supplies only 3 percent of America’s electricity needs.
ATR Urges Senate to Pass U MACT Resolution of Disapproval
On behalf of Americans for Tax Reform (ATR) and millions of taxpayers nationwide, I urge you to support Sen. Jim Inhofe’s (R-Okla.) resolution of disapproval which looks to overturn the EPA’s Utility Maximum Achievable Control Technology regulation, also known as “Utility MACT.” Filed under authority granted by the Congressional Review Act, this resolution would halt the EPA’s efforts to implement destructive, job-killing policies.
With Congress rejecting President Obama’s Cap-and-Trade proposal, the Administration inappropriately utilized the Environmental Protection Agency (EPA) to achieve similar ends. Sen. Inhofe’s resolution of disapproval affords Congress the opportunity to restore long held understandings of Executive and Legislative delegations of power and responsibilities.
The EPA’s own analysis found that the Utility MACT regulation alone will cost $10 billion annually through 2016, making this the most expensive regulation ever written for power plants. This cost estimate does not even include other EPA regulations’ price tags, which compound costs, and increase the total burden of EPA rules.
If allowed to go into effect, Utility MACT costs will be passed to American families and job creators resulting in increased electricity prices and the possible elimination of 1.4 million jobs. The Chamber of Commerce notes that the Utility MACT rule has already resulted in the announced shutdown of nine coal-fired power plants in Maryland, Pennsylvania, Ohio and West Virginia, further disadvantaging these struggling states.
Claims by the EPA of any health benefits related to Utility MACT are greatly exaggerated. In fact, mercury is the only hazardous air pollutant (HAP) which the EPA quantified any health benefits for. But these health benefits are minimal, only achieving between $500,000 and $6 million in health savings per year. Forcing coal-fueled power plants to spend at least $10 billion retrofitting facilities to achieve comparably minuscule health savings fails any cost-benefit analysis.
It is for these reasons I urge you to support Sen. Inhofe’s joint resolution of disapproval; it is imperative Congress prevent the EPA from governing through regulatory fiat.
President, Americans for Tax Reform
House Republicans Rollback Obama's Pro-Union Regulations
After a yearlong fight, House Republicans land a blow against the politicized National Mediation Board (NMB). After assuming office in 2009, President Obama appointed two pro-union members to the three member NMB, the federal agency that oversees union-employer relations in the transportation industry. Effectively controlling the board, Obama’s Democrat appointees rewrote long-held election law to make it easier for unions to organize transportation workers. While the National Labor Relations Board’s nefarious activity has received much publicity, Obama’s regulatory overreach began with the NMB.
Since the National Railway Act’s was ratified in 1926, a union needed to receive a majority of votes from a working group in order for those workers to be unionized. After Obama’s appointees rewrote the rules with a 2010 rulemaking, unions were only required to receive a majority of all voting members’ votes. This unprecedented rulemaking threatened to disenfranchise workers and was a blatant attempt to inflate union membership numbers, and union dues.
Recognizing how problematic the NMB rulemaking was, Transportation and Infrastructure Chairman John Mica (R-Fla.) inserted a provision (Title IX) into the Federal Aviation Administration reauthorization bill that overturned the NMB rule. During debate of Mica’s bill, Republican Steve LaTourette (R-Ohio) joined Democrats and offered an amendment to strip Chairman Mica’s provision out of the bill. LaTourette failed, but his move highlighted how difficult it would be to get FAA authorization across the finish line, especially with Democrats controlling the Senate and White House.
After the Senate passed their predictably bad FAA authorization legislation, the House and Senate conferenced to try and work out the differences between their two pieces of legislation. And there were plenty, but the most contentious deviation was Mica’s NMB provision. Stopgap measures were passed to keep the FAA funded and give House Leadership time to negotiate with Sen. Rockefeller.
After months of contentious debate, the House and Senate agreed to final NMB language—last week both Chambers passed FAA authorization. While it would have been impossible to get Sen. Rockefeller to swallow the provision that overturned the NMB’s pro-union rulemaking, Boehner extracted tangible victories for conservatives.
Obama Proposes Nearly $90 Billion in Tax Hikes on Energy Producers
Obama Energy Tax Proposals
The President’s FY 2013 budget contains billions in tax increase on energy production and consumption. These taxes will result in higher prices at the pump, increased utility bills, and fewer American jobs as companies flee the U.S. and companies cannot recover their investments. Below is a breakdown of energy taxes Obama put forth in his 2013-2022 budget:
|Tax Increase||FY 2013||FY 2013-2022||Industry impact|
|Increase Amortization Period||$61 million||$1.4. billion||$1.4 billion|
|Dual Capacity||$530 million||$10.7 billion||$10.7 billion|
Oil and Natural Gas
Oil and Natural Gas
Oil and Natural Gas
|Repeal Tertiary Injectants||$7 million||$100 million||$100 million|
|Superfund||$1.4 billion||$20.8 billion||$10.5 billion|
|LIFO||$5.5 billion||$73.8 billion||$25.8 billion|
|Passive Loss||$9 million||$82 million||$82 million|
|Oil Spill Liability Trust Fund||$55 million||$717 million||$717 million|
* Data for FY 2014. 2013 calculations are not applicable.
Congress should reject these new tax increases and move to rapidly increase access to domestic energy resources in the Eastern Gulf of Mexico, part of the Rocky Mountains, the Atlantic and Pacific Outer Continental Shelves, and ANWR. Increased access would:
- Create 1 million direct and indirect jobs by 2018 and over 1.4 million by 2030
- Bring an additional 1.27 million barrels of oil equivalents per day online by 2015 and 10.4 million barrels per day by 2030
- Raise over $800 billion in cumulative government revenue by 2030
Senator Hatch looks to improve the Senate's Highway Bill
Today, Sen. Hatch will introduce a series of amendments to the Highway Investment, Job Creation, and Economic Growth Act of 2012 that pull the problematic Highway Bill in the right direction. Similar to the House’s proposals, Senator Hatch’s amendments would expand domestic oil and natural gas production and streamline construction of the Keystone XL Pipeline.
Full development of America’s natural resources would likely create over a million jobs, increase America’s energy security, and provide a boon to downtrodden communities. Sen. Hatch’s amendments use new revenue that results from increased energy production to pay for the Highway Bill. Conversely, Senator Menendez (D-N.J.) has repackaged his job-killing legislation as an amendment to the Highway Bill. The Menendez bill, now amendment, would stifle investment and arbitrarily punish oil and natural gas producers by repealing standard cost recovery tax deductions.
The other side of the coin is spending. Attempting to remedy the Highway Bill’s price tag, Sen. Hatch introduced two amendments: one that eliminates wasteful spending and another that allows the government to spend more efficiently by eliminating the arcane Davis-Bacon law.
Davis-Bacon is a particularly egregious law that has been nickel and diming taxpayers for 80 years. Ratified in 1931, the Davis-Bacon requires the federal government to pay construction workers inflated wages when working on federal projects. Clung to by labor unions, Davis-Bacon ensures that this small minority of construction workers receive a disproportionate share of government work. Giving Americans a greater bang for their buck, Davis-Bacon repeal would reduce the cost of federal construction projects that adhere to the misbegotten wage scale by 22 percent.
Sen. Hatch’s amendments draw a stark contrast from those being proposed by Senate Democrats. While still deeply flawed, the Senate Highway bill would be measurably better if Sen. Hatch’s Amendments were adopted.
ATR Applauds House Republican Energy Policy
2012 began much like 2011 ended, with House Republicans attaching job creating energy projects to “must pass” or essential legislation. Inhibiting domestic energy production at every turn, the Obama Administration’s antagonistic energy policies necessitate legislative remedies. Included in this year’s Surface Transportation reauthorization are three bills that would unleash America’s job creators, our domestic oil and natural gas producers.
Together, the Alaskan Energy for American Jobs Act, the Energy Security and Transportation Jobs Act, and the PIONEERS Act direct the Secretary of the Interior to sell leases Obama cancelled, advance new offshore energy production, and determine clear rules for the development of oil shale. Without such measures, America’s vast oil and natural gas reserves—and the accompanying jobs, economic activity, and increased energy security—would needlessly remain in limbo.
However, Democrat hyperbole has focused on the importance of infrastructure spending to spur job growth. As three years of failed “stimulus” spending has shown, new spending on transit and pet projects does little to yield economic prosperity. While the bill does endeavor to disassociate these programs from the Trust Fund, a new revenue stream for wasteful infrastructure spending risks effective transportation spending reform. Ultimately, lawmakers should be concerned with saddling positive energy policy with poor transportation initiatives.
Despite Obama’s State of the Union lip service, his rejection of the Keystone XL Pipeline, DOI’s draft five-year offshore leasing plan for 2012-2017, and the Gulf’s effective permatorium reveal an Administration actively undermining America’s job creators. Realistic estimates predict that over a million American jobs are waiting to be realized if only Obama would allow oil and natural gas companies to safely develop the billions of barrels of oil and trillions of cubic feet of gas America contains.
Although ATR would prefer that revenue from new domestic production be used to cut taxes or pay down our debt, it is almost impossible to imagine a near-term political scenario where this is possible. While the Surface Transportation Reauthorization bill threatens to make long-term transportation reform more difficult, the immediate economic gains from energy development are serious proposals worth considering.