Jane Van Ryan
Posted September 16, 2010
Authored by Louisiana State University economist Dr. Joseph Mason, the report found that two tax proposals, the repeal of Section 199 and the repeal of the "dual capacity" provision--which enables all U.S. companies to operate and produce goods and services in other countries without having their profits taxed twice--would destroy jobs and weaken the U.S. economy.
The study, The Regional and National Economic Impact of Repealing the Section 199 Tax Deduction and Dual Capacity Tax Credit for Oil and Gas Producers, found that although the tax proposals are directed solely at the oil and natural gas industry, they could cause:
- 154,000 lost jobs by the end of 2011;
- More than $341 billion in lost U.S. economic output; and
- $68 billion in lost wages nationwide.
Mason appeared on CNBC earlier this week to further explain his findings.
The report says:
"Though politicians think they are selectively targeting 'Big Oil' with these energy tax proposals, they would actually devastate thousands of small American businesses nationwide as well as the workers who depend on them. With at least 150,000 U.S. jobs at stake - in fields ranging from healthcare to real estate - it's clear that the costs of repealing Section 199 and dual capacity far outweigh the potential benefit of increased government revenues that may be derived from the proposal."
Although it's encouraging that the Senate voted down Senator Bill Nelson's amendment to the small business bill, which would have repealed Section 199, political observers say the amendment could reappear in other legislation Enacted in 2004, Section 199 encourages U.S. job retention and growth and provides a deduction available to all U.S. manufacturers, including oil and natural gas companies.
Americans overwhelmingly oppose raising taxes on America's oil and natural gas industry, and most believe higher taxes could kill jobs. According to a survey commissioned by API and conducted by Harris Interactive, 62 percent opposed an increase in taxes on the industry, and 60 percent said it could destroy jobs.
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