If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and congressional Democrats hike the corporate income tax rate, Louisiana households and businesses will get stuck with even higher utility bills.

Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least eight Louisiana utilities.

Working with the Louisiana Public Service Commission, Entergy Louisiana, Entergy New Orleans, Cleco Corporation, Southwestern Electric Power Company, Atmos Energy, Ascension Wastewater Treatment, Inc., Pierre Part Natural Gas Company, Inc. and South Coast Gas Co.  passed along tax savings to their customers.

Entergy New Orleans: As noted in this April 11, 2018, Entergy New Orleans Press Release:

Entergy New Orleans filed with the New Orleans City Council Monday its proposal for implementing the benefits of the recent federal tax reform legislation. If approved by the council, customers would realize approximately $47 million annually in near-term tax savings and an additional $71 million in savings over the longer term.

"We're working to ensure that our customers receive timely benefits from the new tax reform legislation," said Charles Rice, president and CEO of Entergy New Orleans, LLC. "We're glad to pass on these additional savings by reducing rates below what they otherwise would be, especially during the hot summer months when energy usage rises along with the thermometer."

Cleco Corporation: As noted in this July 10, 2019 KTBS excerpt:

SWEPCO and CLECO customers will get a break on their monthly bills in the coming months thanks to lower federal taxes, Louisiana Public Service Commissioner Foster Campbell announced Wednesday.

For the average SWEPCO customers, bills will decline more than $13 per month for the next three months. For CLECO customers, bills will go down more than $12 per month for the next 12 months.

To be more specific, an average SWEPCO residential customer using 1,282 kilowatt-hours will receive a credit of $13.62 on their August, September and October electric bills, while an average CLECO residential customer using 1217 kilowatt-hours will get a $12 credit beginning next month and running through July 2020.

Extending the benefit, average SWEPCO bills for November 2019 through July 2020 will reflect reductions of $3.03 each month.

The overall impact is a reduction of $24.4 million for SWEPCO’s 231,000 Louisiana customers and a drop of $84 million for CLECO’s 285,000 customers.

Entergy Louisiana: As noted in this April 18, 2018, Entergy Louisiana Press Release: 

Entergy Louisiana customers will see a series of rate reductions over the remainder of 2018 under an agreement approved today by the Louisiana Public Service Commission.

The first of the reductions will occur in May as a result of $210 million in federal tax reform-related savings, $105 million of which will be returned to customers over the next eight months, with the remaining half of these savings returned to customers over the following four years.  As a result, a typical residential customer using 1,000 kWh per month will see a roughly $4.20 decrease on monthly bills from May through December of this year.

A second reduction of approximately $2 per month on residential bills will occur in September 2018 as a result of additional credits tied to the Tax Cuts and Jobs Act approved by Congress in late 2017. At the same time, Entergy Louisiana will begin realizing approximately $130 million in annual tax savings to offset the cost of upgrading infrastructure.

“Along with customer refunds, tax reform also helps provide us the ability to invest in modernizing our system for the benefit of customers while maintaining some of the lowest rates in the country,” Phillip May, president and CEO of Entergy Louisiana, said

Southwestern Electric Power Company: As noted in this July 10, 2019 Shreveport Times excerpt:

Average SWEPCO customers will see their monthly bills decline more than $13 per month for the next three months due to lower federal taxes paid by SWEPCO, according to Public Service Commissioner Foster Campbell.

An average SWEPCO residential customer using 1,282 kilowatt-hours will receive a credit of $13.62 on their August, September and October electric bills. 

Extending the benefit, average SWEPCO bills for November 2019 through July 2020 will reflect reductions of $3.03 each month.

The overall impact is a reduction of $24.4 million for SWEPCO’s 231,000 Louisiana customers.  Exact impacts for customers will be based on their individual consumption.

Atmos Energy: As noted in this February 14, 2018 Louisiana Public Service Commission document: 

Income taxes, like all other prudently incurred costs, are passed through to our customers through our rates. Atmos Energy is committed to ensuring customers receive the full benefit of the changes in the utility’s cost of service resulting from the TCJA. As discussed in more detail below, the annual rate stabilization clause (“RSC”) process allows changes in the Company’s cost of service to be promptly reflected in its rates each year, as opposed to waiting for a general rate case. Through Atmos Energy’s RSC filing on December 22, 2017 (Trans La) and April 1, 2018 (LGS), the comprehensive impacts of TCJA will be reflected in customer rates as early as July 1, 2018, as described further below. However, if the Commission desires a quicker impact to rates, the Company is amenable to discussing accelerated solutions that will permit the current portion of the income tax expense savings to be implemented sooner. Below is a description of how these savings will be incorporated into Atmos Energy’s rates in the Louisiana Gas Service Rate Division (“LGS”) and the Trans Louisiana Gas Division (“TransLa”). 

A. LGS 

The Company will file its annual rate stabilization clause (“RSC”) filing before April 1, 2018. Included in this year’s filing will be an update to the federal income tax rate from 35% to 21% Based on the change in deficiency that results from the 35% to 21% income tax rate, the reduction to the 2017 LGS RSC filing for this item is expected to be approximately $5.9 million. 

The Company recorded excess deferred income taxes (“EDIT”) in its quarter ended December 31, 2017 related to LGS in the amount of $38.3 million. An estimate of the amortization period is not available at the time of this report. However if the EDIT is amortized over a period of forty years the annual reduction to cost of service is an additional $950,000, with a corresponding adjustment to rate base. 

The Company is working to establish an initial estimate for incorporating the EDIT into the RSC filing. The software modifications to incorporate the amortization into the books and records will take some months to perform. Therefore, the Company believes that an initial estimate is the best approach for this year’s filing. Any variances in the estimated amortization and actual amortization can be trued—up on a subsequent RSC filing. 

B. TransLa 

The Company filed its RSC filing on December 22, 2017; thus, the filing did not incorporate the impact of TCJ A. However, the Company and Commission Staff have agreed (Docket U—347l4) to suspend the April 1, 2018 implementation of rates to allow additional time for Staff’s consultant to conduct proper discovery and to incorporate the impacts of TC] A into the filing. The effect of reducing the income tax rate from 35% to 21% reduces the TransLa filing by approximately $2.5 million. 

The Company recorded EDIT in its quarter ended December 31, 2018 related to Trans La in the amount of $23.3 million. An estimate of the amortization period is not available at the time of this report. However if the EDIT is amortized over a period of forty years the annual reduction to cost of service is an additional $575,000, with a corresponding adjustment to rate base. 

The Company is working to establish an initial estimate for incorporating into discovery provided in the Trans La RSC filing. The software modifications to incorporate the amortization into the books and records will take some months to perform. Therefore, the Company believes that an initial estimate is the best approach for this year’s filing. Any variances in the estimated amortization and actual amortization can be trued—up on a subsequent RSC filing. 

Ascension Wastewater Treatment, Inc.: As noted in this March 20, 2018 Louisiana Public Service Commission document: 

In summary, AWT’s 2018 estimated current income tax expense savings resulting from the passage of the TCJA totals $53,604 for an estimated $0.31 monthly rate reduction per ratepayer. All requirements to both record and adjust any regulatory liabilities as it relates to the reduced federal rate of 21% along with any excess accumulated deferred income taxes will be made, accordingly, subject to AWT’s ability to verify the actual amount of tax savings.

Pierre Part Natural Gas Company, Inc.: As noted in this March 20, 2018 Louisiana Public Service Commission document: 

Pierre Part further understands there will be two impacts from the tax reduction. First, there is a reduction in annual federal tax expense incurred by Pierre Part. Second, there is a reduction in the amount of accelerated deferred taxes that Pierre Part is required to reflect on its balance sheet and a corresponding increase in rate base. Each of these impacts is discussed below. 

Regarding the reduction in annual federal tax expense, Pierre Part estimates the reduction will be approximately $5,075 based on June 1, 2017 - July 31, 2018 fiscal year data. Current rates are based on federal tax expense of $12,689, which would be reduced to 7,615 based on a 21% tax rate, for a difference of $5,075.

Regarding the reduction in deferred taxes, Pierre Part estimates the reduction would be approximately $853 per year. The reduction of deferred taxes on the balance sheet would be $22,800, amortized over 25 years, for an annual amount of $853 after offsetting the corresponding effect of increased base rate.

South Coast Gas Co.: As noted in this March 20, 2018 Louisiana Public Service Commission document: 

South Coast further understands there will be two impacts from the tax reduction. First, there is a reduction in annual federal tax expense incurred by South Coast. Second, there is a reduction in the amount of accelerated deferred taxes that South Coast is required to reflect on its balance sheet and a corresponding increase in rate base. Each of these impacts is discussed below. 

Regarding the reduction in annual federal tax expense, South Coast estimates the reduction will be approximately $88,131 based on June 1, 2017 — July 31, 2018 fiscal year data. Current rates are based on federal tax expense of $220,329, which would be reduced to $132,198 based on a 21% tax rate, for a difference of $88,131. 

Regarding the reduction in deferred taxes, South Coast estimates the reduction would be approximately $10,146 per year. The reduction of deferred taxes on the balance sheet would be $271,268, amortized over 25 years, for an annual amount of $10,146 alter offsetting the corresponding effect of increased rate base.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households try to recover from the pandemic.

Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.

If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and congressional Democrats hike the corporate income tax rate, North Carolina households and businesses will get stuck with even higher utility bills.

Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least two North Carolina utilities.

Working with the North Carolina Utilities Commission, Duke Energy Carolinas and Duke Energy Progress passed along tax savings to their customers.

As noted in this February 1, 2018 Duke Energy press release:

Duke Energy today outlined its proposal to pass along savings from the new federal tax law to its North Carolina customers in ways that will lower bills in the near term and help offset increases in the future.

Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP) offered the proposal in a filing with the North Carolina Utilities Commission (NCUC) today. Duke Energy has maintained customers' rates significantly below the national average for many decades while providing safe, reliable and increasingly clean energy for North Carolinians.

"This is a unique opportunity that allows us to reduce customer bills in the short term while also helping to offset future rate increases," said David Fountain, Duke Energy's North Carolina president. "With a balanced approach, our customers can benefit from a reduction in the corporate income tax rate, while we continue to make smart investments on behalf of our customers."

As noted in this June 22, 2018 North Carolina Utilities Commission press release: 

One of the primary drivers for the order to reduce rates is the passage of the Federal Tax Cuts and Jobs Act, which reduced the corporate income tax rate from 35% to 21%.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households try to recover from the pandemic.

Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.

If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and congressional Democrats hike the corporate income tax rate, South Carolina households and businesses will get stuck with even higher utility bills.

Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least four South Carolina utilities. The savings take the form of either a rate reduction, or, a reduction to an existing/planned rate increase.

Working with the South Carolina Public Service Commission, Duke Energy, Dominion Energy, Palmetto Utilities Inc. and South Carolina Gas and Electric passed along tax savings to their customers.

South Carolina Gas and Electric: As noted in this August 31, 2018 South Carolina Public Service Commission document: 

In recognition of the Tax Cuts and Jobs Act of 2017 (“Tax Reform”), SCE&G shall provide customers a retail electric service bill credit equal to 4.42% of their billed rate schedule charges, excluding past due amounts, interest, penalties, non-standard service charges, franchise fees, and sales taxes. This bill credit shall be fixed at this amount for bills rendered after the effective date of this rider and before January 1, 2021 or until such earlier date as the Public Service Commission of South Carolina replaces it with a different calculation for applying the impact of the Tax Reform.

Palmetto Utilities Inc.: As noted in this July 13, 2020 The Post and Courier excerpt:

The rate hike would be lower in the first year because the utility agreed — as a stipulation of the settlement — to pass along to customers its savings from the 2017 Tax Cuts and Jobs Act.

The utility would agree not to seek another rate hike until 2023.

Duke Energy: As noted in this June 3, 2019 Duke Energy press release:

The changes in customer rates come after a lengthy and very public process evaluating a request that is at the heart of the company’s ability to build a smarter energy infrastructure for South Carolina. The new rates also reflect the company’s efforts to deliver electricity that is cleaner than ever, and ensure the best customer service possible. The new rates will also reflect savings from recent tax reform.

Dominion Energy: As noted in this June 14, 2019 Dominion Energy letter:

Additionally, pursuant to PSC Order No. 2018-308 issued in Docket No. 2017-381-A related to The Tax Cuts and Jobs Act ("Tax Act"), the PSC requires utilities to track and defer as a regulatory liability the effects resulting from the Tax Act. The Total as Adjusted ROE of 7.05% includes the estimated impact of the Tax Act on SCE&G's base retail electric business for the twelve-months ended March 31, 2019.

Certain accumulated deferred income taxes contained within net regulatory liabilities represent excess deferred income taxes arising from the re-measurement of deferred income taxes upon the enactment of the Tax Act. These amounts will be amortized to the benefit of customers as prescribed in PSC Order No. 2018-804.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households try to recover from the pandemic.

Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.

President Joe Biden’s Fiscal Year 2022 budget proposal calls for 30 tax increases on American individuals and businesses totaling $2.975 trillion over the next decade. 

The budget also calls for new IRS “enforcement” measures carried about by 87,000 new IRS agents that Biden claims will squeeze taxpayers for an additional $787 billion. 87,000 IRS agents could fill Nationals Park twice.

Combined, these proposals would increase federal revenues by $3.76 trillion over the next decade. 

The list of 30 tax increases is below: 

1. Raise the corporate income tax rate to 28 percent: $857 billion tax increase 

After accounting for state corporate taxes, Biden will give the U.S. a 32 percent corporate rate, a tax rate significantly higher than Communist China’s 25 percent tax rate. 

This tax increase will harm working families, as a significant portion of this tax is borne by workers in the form of wages and jobs. This is not a point of contention. In a 2017 report, Stephen Entin of the Tax Foundation argued that 70% of corporate taxes are borne by labor. Other economists argue that anywhere from 20% to 50%, to even 100% of the tax hits workers. 

It will also harm families by increasing the costs of household goods and services. A 2020 study by the National Bureau of Economic Research found that 31% of the corporate tax falls on consumers. 

This tax increase won't just hit large businesses. One million C-corporations are classified as small employers, defined by the Small Business Administration as any independent business with fewer than 500 employees. 

A corporate tax increase will also threaten the life savings of families by reducing the value of publicly traded stocks in brokerage accounts or in 401(k)s. Individual investors opened 10 million new brokerage accounts in 2020 and at least 53% of households own stock. In addition, 80 million to 100 million people have a 401(k), and 46.4 million households have an individual retirement account. 

2. Double the capital gains tax to 40.8 percent and the imposition of a second death tax by imposing capital gains taxes on unrealized assets at death: $322 billion tax increase 

The U.S. currently has a combined capital gains rate of over 29 percent, inclusive of the 3.8 percent Obamacare tax and the 5.4 percent state average capital gains rate. Under Biden, this rate would approach 50 percent. This would give the U.S. a capital gains tax that is significantly higher than foreign competitors. 

Under Biden’s plan, Californians will pay a top capital gains tax rate of 54.1 percent (37% + 3.8% + 13.3% California state rate = 54.1%). 

The budget will also impose the 40 percent capital gains tax on the unrealized gains of every asset owned by a taxpayer when they die. This will be imposed in addition to the existing 40 percent Death Tax and will disproportionately fall on family-owned businesses, many of which are asset rich, but cash poor. 

These businesses are already forced to liquidate structures, equipment, land, and other assets because of the Death Tax. Repealing step-up in basis will compound this problem and force family-owned businesses to sell a significant portion of their business or go into significant debt to pay their tax liability. 

Taking away step-up in basis has already been tried and failed. In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was restored in 1980.

As noted in a July 3, 1979 New York Times article, it was "impossibly unworkable": 

“Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law's effective date until 1980 while it struggled again with the issue.” 

3. Increase the top income tax rate to 39.6 percent: $132 billion tax increase 

This tax increase will hit small business that are organized as sole proprietorships, LLCs, partnerships and S-corporations. These “pass-through” entities don’t pay taxes themselves but pay taxes through the individual side of the tax code. 

A significant portion of business income is paid through the individual side of the tax code. As noted in a Senate Finance Committee report, "in 2016, only 42 percent of net business income in the United States was earned by corporations, down from 78.3 percent in 1980." 

4. Impose a 15 percent minimum tax on “book income”: $148 billion tax increase 

This tax increase will create a new minimum tax on American businesses and disallow important, bipartisan credits and deductions that help promote job creation and economic growth.  

The Left routinely disparages businesses that lower their federal income tax liability through the use of credits and deductions, falsely arguing that these businesses are using tax loopholes. In reality, these businesses are using a number important, bipartisan tax provisions, like research and development tax credits, full business expensing, and the deduction for net operating losses. 

For instance, in 2009, Speaker Pelosi hailed legislation expanding NOLs, arguing the provision helps businesses “succeed” and “hire new people.” Similarly, President Obama pushed to expand full business expensing, arguing it would be a “strong incentive to increase investment.” 

5. Create a 21 percent global minimum tax: $533 billion tax increase 

This would modify existing international tax rules to create a 21 percent global minimum tax on American businesses operating overseas. 

This will impose double taxation on American businesses and make it difficult for them to compete against foreign companies. Under Biden’s plan, an American business operating in the United Kingdom will face British taxes and then American taxes. By comparison, a British business operating in the U.S. will only pay U.S. taxes because the UK has a territorial system that only taxes income earned in that country. 

6. Repeal the deduction for foreign-derived intangible income: $123 billion tax increase 

This will impose a steep tax increase on American businesses that house their intellectual property in America. 

7. Replace the Base Erosion Anti-Abuse Tax (BEAT) with the Stopping Harmful Inversions and Ending Low-Tax Developments (SHIELD) Rule: $390 billion tax increase 

This would replace the BEAT with a new minimum tax set at either 21 percent or a rate agreed to by the Organisation for Economic Co-operation and Development. 

Treasury Secretary Janet Yellen wants to surrender U.S. sovereignty to the OECD and the G20, a group that includes China and Russia. She has previously stated she wants to “end the pressures of tax competition” and “make all citizens fairly share the burden of financing government.” 

8. Raise taxes on 1031 Like-kind exchanges: $19.5 billion tax increase 

The budget proposes disallowing taxpayers from utilizing 1031s if they have gains exceeding $500,000. 1031s are not a tax loophole as some claim but are important tax provisions promoting reinvestment and liquidity. Repealing this provision would harm smaller real estate investors by forcing them to forego new investments or go into debt to finance transactions. 

1031s are typically used for smaller real estate transactions. According to the National Association of Realtors, 1031s were used in about 12 percent of real estate sales. Almost 85 percent of these transactions were from smaller investors such as sole proprietorships or S corporations. 

Repealing 1031s would harm investment in property. It would increase holding periods as taxpayers would be encouraged to retain assets longer to avoid paying capital gains taxes. In fact, due to the added complexities of financing projects and taking on debt, an estimated 40 percent of real estate transactions would not have occurred without 1031s. 

9. Limit foreign tax credits from sales of hybrid entities: $436 million tax increase 

This proposal would prohibit American businesses from claiming foreign tax credits on certain foreign acquisitions. 

10. Deny businesses tax deductions related to certain international investment: $112 million tax increase 

11. Restrict interest deductions for certain financial reporting groups: $18.6 billion tax increase 

12. Makes permanent the cap on passthroughs deducting net operating losses: $42.9 billion tax increase 

The provision makes the $500,000 cap on passthrough businesses deducting excess business permanent. This could impact a restaurant, retailer, or other capital-intensive business that sees significant business losses in any year due to the cost of wages, rent, new equipment, inventory, and interest payments. 

The cap was originally created by the Tax Cuts and Jobs Act passed by Congressional Republicans. It was used to offset the creation of the 20 percent deduction for passthrough businesses, which resulted in a net tax cut for taxpayers. The budget proposes making the cap permanent, but not the 20 percent deduction, resulting in a significant tax increase. 

13. Increase taxes on carried interest capital gains: $1.5 billion tax increase 

In addition to raising the capital gains tax, Biden would increase taxes on carried interest capital gains. Not only would this have the same negative impact as the capital gains tax increase, but it will also threaten the retirement savings of Americans across the country. 

Carried interest is the tax treatment for investment made by private equity investors. Private equity is an investment class structured as a partnership agreement between an expert investor and individuals with capital. 

Private equity seeks to invest in companies with growth potential and, as a result, has the potential to deliver strong returns. In fact, according to a recent study, private equity returned gains exceeding 15 percent over 10 years. 

Because of these strong gains, private equity is a popular and reliable investment strategy for Americans across the country. The largest investor in private equity is public pension funds, which have collectively invested an estimated $150 billion in private equity. As noted by one study, 165 funds representing 20 million public sector workers have invested an average of 9 percent of their portfolios in private equity. 

The financial security these returns provide to American savers, including firefighters, teachers, and police officers, will be threatened if lawmakers raise taxes on carried interest capital gains. 

14. Close the “Biden” loophole on Medicare Payroll Taxes: $236 billion tax increase 

The budget proposes disallowing taxpayers from using passthrough entities like S-corporations to avoid the 3.8 percent Obamacare net investment income tax.  

Biden has repeatedly utilized this loophole in a practice that left-leaning tax experts described as “aggressive.” Specifically, he avoided paying $500,000 in payroll taxes including $121,000 in Obamacare taxes by sheltering $13 million of income in several S-corporations. 

It is clear hypocrisy that Biden used the same loophole that he now wants to close. Moreover, Biden supports expanding Obamacare and routinely says “the rich” need to pay their fair share. 

15. Repeal expensing of intangible drilling costs (IDCs): $10.5 billion tax increase  

The expensing of IDCs allows companies to recover costs such as labor, site preparation, equipment rentals, and other expenditures for which there is no salvage value. IDCs often represent 60 to 80 percent of total production costs. This tax hike could result in the loss of over a quarter million good-paying jobs by 2023. As a recent letter by Rep. Jodey Arrington (R-Texas) and over 50 members of Congress explains, IDCs are neither unique nor lavish tax breaks for the oil and gas industry:  

“IDCs are not credits, loopholes, or subsidies. They are ordinary and necessary deductions, and a far cry from the lavish tax credits flowing to wealthy green energy investors and electric vehicle owners. Our tax code is designed to levy taxes on net profits, not on dollars used for operational costs or capital expenditures. Every business since the inception of the tax code, has used cost recovery provisions.” 

Biden is proposing to repeal many oil and gas tax provisions even though the cost of gasoline and energy is increasing, with the cost of gas at a seven-year high.

Not only would these tax increases further increase the cost of energy, they will also threaten millions of high-paying manufacturing jobs that the oil and gas sector supports. Biden routinely claims he is a champion of high-paying manufacturing jobs, yet these tax increases undermine this claim.

16. Modify foreign oil and gas extraction income and foreign oil related income rules: $84.8 billion tax increase  

This proposal would increase taxes on foreign oil and gas extraction income for American businesses operating overseas. 

17. Repeal enhanced oil recovery credit: $7.8 billion tax increase  

This provision would repeal the 15 percent credit for eligible costs attributable to enhanced oil recovery (EOR) projects like the costs of depreciable or amortizable tangible property or intangible drilling and development costs (IDCs). This credit is a bipartisan provision to incentivize carbon capture and sequestration, ultimately leading to less greenhouse gas emissions. 

18. Repeal credit for oil and natural gas produced from marginal wells: $516 million tax increase  

This repeals a credit for oil and natural gas produced from marginal wells, which is limited to 1,095 barrels of oil or barrel-of-oil equivalents per year.   

19. Repeal capital gains tax treatment for royalties: $455 million tax increase 

Royalties received on the disposition of coal or lignite currently qualify as a long-term capital gain. The budget repeals this, requiring this income to be taxed at the higher ordinary income rate. 

20. Repeal exception to passive loss limitations provided to working interests in oil and natural gas properties: $86 million tax increase  

21. Repeal percentage depletion with respect to oil and natural gas wells: $9.2 billion tax increase  

Percentage Depletion allows taxpayers to deduct the cost of oil and gas wells as a statutory percentage of the gross income of such property. This provision is used by small, independent, and family-owned oil and gas companies, and royalty owners like farmers and ranchers. 

22. Modify tax rule for dual capacity taxpayers: $1.4 billion tax increase  

23. Increase geological and geophysical amortization period for independent producers: $2 billion tax increase  

The amortization period for geological and geophysical expenditures incurred in connection with oil and natural gas exploration in the United States is two years for independent producers and seven years for integrated oil and natural gas producers. This proposal would require these expenses to be amortized over a seven-year period. 

24. Repeal expensing of exploration and development costs: $911 million tax increase  

Producers of oil, gas, coal, and minerals can fully immediately deduct 70 percent of the costs associated with exploration and development of a domestic ore or mineral deposit. The remaining 30 percent can be deducted over 60 months. This proposal would repeal this provision, requiring these costs to be depreciated over many years. 

25. Repeal percentage depletion for hard mineral fossil fuels: $1.3 billion tax increase  

Repeals a provision of the tax code that allows companies to deduct 10 percent of their sales revenue to reflect the declining value of their investment. 

26. Repeal the exemption from the corporate income tax for fossil fuel publicly traded partnerships: $1 billion tax increase  

Partnerships that derive at least 90 percent of their gross income from depletable natural resources, real estate, or commodities are exempt from the corporate income tax. Instead, they are taxed as partnerships. This proposal would repeal this provision for publicly traded fossil fuel partnerships, requiring them to be taxed as corporations.   

27. Repeal the Oil Spill Liability Trust Fund (OSTLF) excise tax exemption for crude oil derived from bitumen and kerogen-rich rock: $395 million tax increase  

Because crude oil derived from bitumen and kerogen-rich rock are not treated as crude oil or petroleum products, it is exempt from the Oil Spill Liability Trust Fund tax of $0.09 per barrel of crude oil. This proposal would repeal this exemption. 

28. Repeal amortization of air pollution control facilities: $901 million tax increase   

Under current law, expenses related to certain pollution control facilities can be amortized over 60 months or 84 months. The budget would repeal this provision, requiring these expenses to be depreciated over 39 years.  

29. Reinstate Superfund excise taxes: $25 billion tax increase   

The proposal would reinstate the three Superfund excise taxes at double the previous rates: (1) crude oil received at a U.S. refinery; (2) imported petroleum products (including crude oil) entered into the United States for consumption, use, or warehousing; and (3) any domestically produced crude oil that is used in or exported from the United States if, before such use or exportation, no taxes were imposed on the crude oil.   

30. Modify Oil Spill Liability Trust Fund financing: $513 million tax increase  

This proposal would extend the Superfund excise tax to other crudes such as those produced from bituminous deposits as well as kerogen- rich rock. It would also extend the Oil Spill Liability Trust Fund (OSLTF) tax to include these crudes as well. It would also eliminate the eligibility of the OSLTF for drawback.