With its Sunday editorial, The New York Times continues the campaign to eliminate – only for the U.S. oil industry – standard deductions that are available to all industries and manufacturers. This is arbitrary, discriminatory and misinformed.
According to the Times’ logic, the price of oil – a globally traded commodity – is up, so people have to pay more for gas, so the government should end tax measures that help protect the jobs of Americans who work in the oil and natural gas industry.
The logic is especially hard to swallow when the Times neglects to mention that it enjoys a higher deduction than we do for one of the measures it’s campaigning to have taken away from our industry.
The measure is the Section 199 domestic manufacturers’ provision. The New York Times – along with auto makers, software developers, movie producers and a whole host of other industries – qualifies for a 9 percent deduction under this provision. The oil and natural gas industry is already limited to a 6 percent deduction.
Predictably, The New York Times’ advocacy for tax discrimination falls directly on the heels of a Senate Finance Committee hearing last week, where some Senators tried to convince Americans that Section 199 is a “big oil subsidy” and should be removed only for the top five oil companies in the U.S.
But there’s more to the story than just tax discrimination and fairness. The measure proposed by the Times and some Senate Democrats is counterproductive in every way – to U.S. economic recovery, to reducing U.S. gas prices, to creating U.S. jobs.
As our chairman and CEO, Rex Tillerson, said in last week’s hearing, taxes are one of the factors that go into a company’s decision on where it is able to invest in energy projects.
If the U.S. government decides to place a higher tax burden on a select few companies, but not their competitors, then those targeted companies won’t have the same ability to compete and invest. It doesn’t take a Senate committee to figure out that making it harder to invest also makes it harder to employ.
So by implementing tax discrimination in the name of “fairness,” politicians have decided that the short-term political gain of punishing “Big Oil” is worth more than the long-term economic gains from opening access to resources and encouraging investment. Here’s a quick look at the long-term view:
- A recent study has found that approximately $10 billion to $17 billion in direct upstream investment in this country is at risk per year if the Section 199 and other tax provisions are repealed for our industry.
- One study found that opening up federal lands that Congress has kept off-limits for decades could generate 400,000 new jobs by the year 2025.
- Another analysis shows that such actions as opening up access to resources could generate as much as $1.7 trillion in government revenue over the life of those resources.
The fact is that jobs in the U.S. oil and natural gas industry – and all of the related economic activity and government revenue that goes along with them when they have the access – are no less important than any others in this country.
So, if there are legitimate, economy-wide tax deductions that help create or sustain jobs, our industry should be treated no differently.
But I guess in The New York Times’ view, this logic just isn’t fit to print because it doesn’t support the political agenda of punishing “Big Oil.”