America has a history of being known as a bastion of economic development and innovation. We have been known for what we produce, and the pride that we take in producing it. But we have veered away from being known as a producer and have instead become a nation of consumers — especially in regards to the one product that we depend on most, our energy.
The primary cause of our increasing dependence on foreign nations to meet U.S. energy demands is our own government policies. It is largely the shifts in tax code, the burdensome regulations, and the government red tape that have made it more difficult to develop our energy resources in a way that will allow us to lessen our dependency on our adversaries abroad.
Constant changes and increases in energy tax policy like the recent proposals to change the application of tax code Section 199 and the elimination of the dual capacity tax credit for members of the American energy industry are prime examples of what is making it so difficult to achieve energy independence.
Section 199 of the tax code allows businesses to utilize tax deductions for business expenses. A wide range of businesses in the United States benefit from this deduction, but the Obama administration is seeking to exclude American energy producers from benefiting from this provision. By doing this, President Obama is not only undermining one of the largest and most economically productive industries in the United States but is creating the very same high energy prices for which he attempts to blame our American energy producers.
Yet another punitive tax measure facing American energy companies is the elimination of the dual capacity tax credit. This specific credit allows American-based businesses that earn income overseas to pay taxes once, rather than having to pay taxes to both the nation where the income was earned as well as to the U.S. In short, it ensures that American companies are not double-taxed.
Taking away the ability of U.S. energy producers to utilize the dual capacity credit would not only cost an estimated 637,000 U.S. jobs, but would increase America’s reliance on foreign nations to meet our increasing energy needs. The dual capacity tax credit is a means of preserving a level playing field for American companies’ when competing with their international counterparts. By eliminating the dual capacity tax credit, President Obama would be giving our foreign competitors the upper hand in the global energy market.
Passing these measures will increase the tax burden on American energy companies, create greater unemployment, and will prolong economic recovery. The repeal of the dual capacity tax credit alone would cost the American economy 637,000 jobs (American Energy Alliance) and over the next 10 years will decrease household earnings by nearly $35 billion.
The bottom line is that if we want our economy to recover, if we want to once again be known as the bastion on economic development, and it we want to create jobs, we cannot continue to allow President Obama and his allies in Congress to continue to tie down American producers and job creators in red tape and tax increases.
Rep. Doug Kary