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Saturday, August 28, 2010

Obama Tax Policies Threaten Gulf Recovery From Katrina and BP

Washington Examiner, Looming Tax Hikes Threaten Gulf Economic Recovery, by Bill Dickens:

Will we ever see good news for the Gulf of Mexico region? [On the heels of Katrina and the BP oil spill,] new energy taxes recently proposed in Washington are ensuring that [the Gulf's recovery] future remains only a pipe dream.

Specifically, two new energy taxes being pushed by federal lawmakers would make our domestic energy companies less competitive globally and eliminate job promoting tax incentives at a time when we need them most. Both of these tax increases target only our oil and natural gas industry and, therefore, disproportionately undercut the welfare of costal states where energy exploration and production as a major source of jobs and the economy.

Consider first proposed changes to taxation on income earned abroad. Current ‘dual capacity’ rules grant American companies generating income overseas a tax credit to ensure the IRS doesn’t tax them for earnings on which they’ve already paid taxes elsewhere. For the past 25 years, Washington has maintained this sound tax policy to create an even playing field for domestic businesses in the global market. Yet, the proposed changes would penalize American-owned businesses, putting them at a competitive disadvantage against foreign competitors. That means that U.S. lawmakers would give companies like BP, who wouldn’t be subject to this kind of double-taxation, a leg up on domestic employers who will have fewer resources with which to compete. ...

The second major proposal Capitol Hill is considering involves the repeal of a tax credit known as Section 199. Congress enacted the credit six years ago to provide an incentive for job growth among all U.S. manufacturers, from the auto plants in Detroit to film producers in Hollywood. Now, Beltway politicians are calling for a repeal of this credit for only our oil and gas firms. ...

Though targeted at different sections of the tax code, these dubious proposals share a common consequence: more trouble ahead for our already troubled Gulf community. ...

With the anniversary of Katrina, it’s important to remember that the Gulf region has been hit by a natural disaster in Katrina and a manmade disaster with Deepwater Horizon. Now a Washington-made disaster in the form of energy taxes threatens these same businesses and families already struggling as well as our national economic stability.

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Comments

I live in the Gulf Coast region, and there's lots of good news! (Though little of it is coming from the government and none of it is tax related.) All of the seafood making it to tables is deliciously edible. New Orleans Saints won the Super Bowl. Public school scores have improved and FEMA finally freed up the recovery money this week with fewer restrictions. New mayor in New Orleans and lots of good times. The spirit of the people has prevailed. From the Florida panhandle to Corpus Christi, we are resilient and thanks to volunteers and kind hearts from all over the country, we stand ready today to welcome visitors to have some fun. It's probably fitting since these proposed policies will whittle down our economy to just tourism. Our shipping industry and our oil & gas industry will definitely take a hit from these proposed changes.

Posted by: NOLA | Aug 28, 2010 5:36:57 AM

Look at it this way. Destruction of the economy means loss of population and loss of electoral votes.

Posted by: RebeccaH | Aug 28, 2010 7:32:41 AM

all designed to push up the cost of energy in the furtherance of the lunatic lefts obsession with global wa....err....climate change.

Human costs are of no consequence to this crew.

Posted by: swift boater | Aug 28, 2010 8:01:40 AM

At some point, these repeated failures of left-wing economic policy reach the point of parody. I think we're just about there.

Posted by: Matt NYC | Aug 28, 2010 9:32:42 AM

So how do we fix the problem of multinationals shifting profits to their overseas subsidiary? Yes the U.S corporate tax rate stands at 35%, some say that is the culprit, but report after report shows corporations do not actually pay that rate. When everything is added and subtracted,most pay in the mid 15%, while some pay no taxes at all. Using those numbers to compare with other counties tax rates, we are right in the middle, yet these multinationals continue to loophole the current system.

Posted by: Charlie Rhodes II | Aug 28, 2010 9:40:29 AM

CR II: So how do we fix the problem of multinationals shifting profits to their overseas subsidiary?

Why, we force them out of business in our country, along with losing all the jobs that they create. Great solution!

Posted by: Woody | Aug 28, 2010 12:20:56 PM