Rep. Arrington Leads Letter Urging Congress to Reject Discriminatory Tax Hikes on American Energy 

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Posted by Isabelle Morales on Thursday, May 13th, 2021, 1:10 PM PERMALINK

Congressman Jodey Arrington (R-Texas) today released a letter signed by 55 members of Congress in opposition to efforts to raise taxes on American energy producers.

The letter was signed by 55 members of Congress including House Republican Whip Steve Scalise (R-La.) and House Republican Ways and Means members Devin Nunes (R-Calif.), Ron Estes (R-Kan.), Kevin Hern (R-Okla.), Mike Kelly (R-Pa.), Carol D. Miller (R-W.Va.), Adrian Smith (R-Neb.), Jason Smith (R-Mo.), Lloyd Smucker (R-Pa.), and Brad Wenstrup (R-Ohio). 

President Joe Biden has proposed repealing  oil and gas tax “subsidies” as part of his “infrastructure” plan. However, many of these provisions are part of the ideal tax code and if repealed would result in discriminatory tax treatment for oil and gas businesses that would threaten jobs and drive up costs for working families and small businesses.

As the letter notes, the Left is trying to deny oil and gas businesses that same tax treatment that every other industry receives:  

“While oil and gas, like many U.S. industries, will suffer from broad sweeping tax increases, they are also being singled out, targeted, and denied the same tax treatment that is available to every industry in the U.S. economy.” 

Specifically, Democrats are pushing to eliminate provisions like the deduction for Intangible Drilling Costs (IDCs), which allows independent producers to immediately deduct business expenses related to drilling such as labor, site preparation, repairs, and survey work. As the letter 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.”

The oil and gas sector supports 11 million high-paying manufacturing jobs. President Biden repeatedly talks about creating millions of high-paying manufacturing jobs. However, by pushing tax hikes on oil and gas taxpayers, Biden would be taking aim at 11 million existing high-paying manufacturing jobs. Biden should be focused on policies that will create more jobs, not proposals that threaten existing jobs.

The Biden tax hikes could also increase costs for families and small businesses. As Rep. Arrington notes, the oil and gas industry supplies nearly 70 percent of the United States’ energy needs and has kept prices low and accessible for millions of families. In fact, household energy costs have dropped by an average of 15 percent in the last decade.

The oil and gas industry has also ensured the U.S. has energy independence, which helps our national security. The industry provides a key input for critical products such as fertilizers, pharmaceuticals, medical supplies, and a host of other pivotal technologies. 

Biden’s effort to use the tax code to discriminate against oil and gas taxpayers should be rejected. Rep. Arrington and other members of Congress should be applauded for their efforts to push back against this tax hike and for setting the record straight that the oil and gas industry has been a driving force for economic growth, American innovation, and increased quality of life for all Americans.

Photo Credit: Barbara Brannon

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