Taxes, Energy and the Economy
As this new Administration and Congress recently reformed the US tax code, the oil and natural gas industry is poised now more than ever to continue investing billions into our nation’s economy, contributing to our economic output, securing our energy future and supporting over 10 million new jobs – all in a safe and reliable manner. a new administration and Congress settle in, policymakers should resist whatever inclination there might be to raise taxes on U.S. energy companies.
However some politicians still want to enact targeted and punitive tax measures on our industry; this is a false choice. For starters, the overwhelming majority of U.S. voters think it’s a bad idea. Harris Poll surveyed actual voters on election night, asking whether they support or oppose higher taxes that could negatively impact domestic energy investment and development – 72% opposed. In a world where partisanship is growing, opposition to higher energy taxes is consistent across the political spectrum.
Most Americans probably recognize that energy tax policy can have as much impact on U.S. energy security as other factors, such as access to reserves and the regulatory environment. They may not know that our industry already contributes about $70 million a day on average to the federal government in taxes, rents and royalties. From 2011 to 2015, oil and natural gas income tax expenses (as a share of net income before income taxes) averaged 37 percent, compared to 25.8 percent for other S&P Industrial companies.
The overarching point is that industry already is a significant contributor to the federal treasury – more than most sectors. The better idea to raise revenues for government is to implement additional pro-development energy policies that foster increased industry activity that will generate more tax receipts, rents and royalties. Those who claim raising our taxes is the path forward will take America on the wrong course. The right course – for U.S. energy, economic growth and security – is to sustain and extend America’s energy renaissance with policies that encourage safe development, while also increasing revenues to governments at all levels.
America’s oil and natural gas industry supports 10.3 million jobs in the United States and nearly 8 percent of our nation’s Gross Domestic Product. We spur economic growth through hundreds of billions of dollars investing right here at home every year. We create jobs across a wide range of other sectors to support our activities. We pay high wages and help American families work their way up the economic ladder.
API applauded efforts made by the House, Senate, and the Administration in late 2017 to re-write our nation’s tax code, lower corporate tax rates, and make the US a competitive place to do business by international tax reforms. To see API’s work on tax reform and our statements, please read more.
API partners with leading scholars, researchers, world-class qualitative and quantitative analysis firms and data analysts to produce unparalleled studies and research. See below for examples of various studies about the effect of tax policy on the oil and natural gas industry in the United States.