Action Alert: Federal Energy Tax Plans Threaten North Dakota’s Economy
North Dakota Senator Kent Conrad has taken an upfront position in the discussion of tax increases in the budget/debt debate in Washington. As NDTA has told you before, these tax increases would disproportionately affect North Dakota’s booming oil economy, and would generally reduce American production of energy.
Just in the last couple days, the push to include these energy tax increases in the larger budget and debt plan have been bolstered as a part of the Gang of Six plan.
Earlier this month, an economic policy report by Dr. Joeseph R. Mason, PhD of Louisiana State University was released in which the true effect of these proposed tax increases was analyzed.
One of the changes would prohibit oil and gas companies from using the manufacturer’s deduction created by Section 199 of the American Jobs Creation Act of 2004. The other change would create new limits on foreign tax credits by US dual-capacity taxpayers, which-like international oil companies-deal with a foreign country as both a sovereign and provider of economic benefits.
“The proposed revisions to Section 199 and dual capacity for the oil and gas industry are expected by the [Department of the] Treasury to raise approximately $30 billion in federal tax revenue over the next 10 years,” he said. “But this comes at the expense of industry cutbacks that can reasonably be expected to cost the economy some $341 billion in economic output, 155,000 jobs, $68 billion in wages, and $83.5 billion in reduced tax revenues.
“The net fiscal effect, a loss of $53.5 billion in tax revenues, suggests that the policy proposals exacerbate, rather than alleviate, the federal deficit.”
Unfortunately, Senator Conrad is taking a hardline to push the elimination of these deductions that will only cause trouble for North Dakota’s economy.
Sen. John Hoeven, R-N.D., has attended meetings with the Gang of Six in recent months and also was in the room Tuesday when the proposal was unveiled, spokesman Don Canton said.
He’s expressed support for their work in the past, even encouraging fellow Republicans to support the process. But Canton said he wasn’t ready to announce if he’ll sign onto the group’s deficit reduction plan.
“At this point it’s still a work in progress, but he’s supportive of the group and the approach,” Canton said Tuesday. “We’ll be discussing it tomorrow.”
These tax increase would not be good for North Dakota, which is the only state with a booming economy as shown by a 34% increase in taxable sales last quarter including, for the first time, more taxable sales in the Williston area than in the Fargo area .
Dustin Gawrylow is the executive director of the North Dakota Taxpayers Association.Tags: deficits, Dustin Gawrylow, gang of six, John Hoeven, Kent Conrad, national debt, North Dakota News, north dakota taxpayers association, Taxes