Tax reform: If both parties love it, why doesn't it go anywhere?
A speech by the an oil industry lobbying group Tuesday showed how interest groups are influencing the process, worried that they could be the big loser in tax reform.
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Wiping out most of the tax expenditures that help the oil and gas industry would save $38.5 billion over the next decade, the Congressional Research Service (CRS) estimates. Other changes that Democrats desire could add an additional $25 billion in savings over the next decade.Skip to next paragraph
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Gerard countered that Congress is focused on the wrong solution. If energy producers had greater access to reserves, the US would reap more than $800 billion in higher tax revenue through 2030 – or $47 billion a year – according to a study by energy research group Wood Mackenzie, Gerard said. He stressed that energy investments are producing economic growth from Pennsylvania to North Dakota.
His concern is that his industry could lose its tax breaks without getting comprehensive tax reform.
“Our view is that we should not be singled out as an industry for punitive tax treatment,” Gerard said in a subsequent news conference.
“If you’re going to have a corporate tax reform discussion,” he continued, “we are prepared to enter that discussion. We are going to be at the table along with everybody else, and it truly should be the comprehensive reform.”
The oil and gas industry has had favorable tax treatment for more than a century. One provision, intended to encourage the economically risky process of drilling for fossil fuels, has been in the tax code since 1913, according to the CRS.
But keeping tax provisions in the code makes it harder to get the savings needed to lower rates. And so as other powerful interest groups also weigh in to keep tax provisions – the health-care industry, veterans, real estate interests, the list goes on and on – the process of figuring out whose tax breaks will get the ax gets thornier.
That is the challenge facing congressional tax reformers. Gerard says he would be open to surrendering his favorable tax provisions so long as lower overall rates “do no harm.” But it appears to be impossible to get to the broader good of a tax leaner tax code, which economists say should spur the economy, without doing anyone any harm.
“There are always winners and there are always losers,” said Bruce Josten, the US Chamber of Commerce’s chief lobbyist, in an interview with the Monitor in November. “Nobody pays the same amount of tax. Your deductions are different than mine.”
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