Will Michael Bennet go along with the assault on Colorado's energy and tech industries?
As Democrats renew their push for energy taxes in the name of the Cult of Global Warming, Secretary of Energy Steven Chu, a man who believes we can fight global warming by all painting our roofs white (seriously, he does), is telling Americans that we’re acting like “unruly teenagers” in our opposition to the economy-crushing prospects of cap-and-trade.
But it’s not just the Waxman-Markey bill which threatens America’s future ability to be less dependent on imports for our energy. Tax provisions in the Obama Administration’s 2010 budget proposal are a large caliber weapon aimed out our real energy industry (as opposed to the minuscule production of all “green” energy sources combined.)
The administration wants to change the ability of corporations to defer income tax on income earned overseas until the money is brought back into the country. For large US energy producers with overseas operations, this will lower their overall return on capital and leave them with less money available for exploration and other R&D. (This particular change is likely to be even worse for technology companies, of which Colorado has many, than for energy companies.)
Beyond this enormous and destructive change (even the left-leaning Atlantic magazine recognizes the threat it poses), there are several other tax hikes aimed directly at energy companies, some of which will be so expensive that they must cause an increase in US energy prices and a decrease in domestic exploration.
Of these, here are a few of the biggest:
- Repealing the expensing of intangible drilling costs. This ability has been in place in our tax code since 1913. According to the American Petroleum Institute’s analysis of the various energy tax hikes being proposed by Obama, “Intangible drilling costs generally include cost items that have no salvage value, but are necessary for the drilling of exploratory wells or the development of wells for production.” API estimates this tax increase to take nearly $2 billion out of the energy sector over just the first 5 years.
- Repealing the manufacturing tax deduction which was put in place in 2004 for the purpose of boosting domestic employment. While there is an argument to be made that energy employment is not as highly affected by tax rates as employment in other more traditional manufacturing industries, this tax change is nevertheless expected to cost the industry $5 billion…money which they could be using to make America energy-independent, or at least less dependent.
- Repealing the percentage depletion allowance, similar to depreciation for other businesses. This change is particularly damaging to Colorado because it currently applies only to production by independent American producers, and is most relevant to smaller producers because of the provision’s structure. If there is one provision which is targeted at the energy industry’s version of “small business”, it’s this one…and it’s expected to cost the industry almost $3 billion between 2010 and 2014.
To be fair, one can argue that these provisions were loopholes for the energy industry and I am no supporter of corporate welfare. However, the first and last of these three bullet points discuss the repeal of provisions which strike me as reasonable and with analogues in other businesses.
And again, the repeal of the ability to defer income tax on foreign-earned income is an economic disaster in the making.
In combination, the Administration’s proposals regarding the taxation of energy and the energy industry could only have been designed by people who hate the extremely efficient energy sources of oil and coal (and, of course, nuclear power), and who love wind turbines and solar panels even though they don’t and can’t produce even a decent single digit percentage of our energy needs. In short, these rules could only have been proposed by people who hate or don’t understand economics…and of course, if you look at the Democratic leadership in Congress and at Obama’s energy advisors (all of whom are radical environmentalists), that’s exactly what’s happened.
With Colorado’s having a large energy industry (though not as large as it used to be, in large part due to the anti-energy policies of Governor Bill Ritter), one has to wonder how our senators, Mark Udall and Michael Bennet, will vote on bills that include these provisions. Bennet, in particular, with an election looming in just over a year and without the long history of environmental activism that Udall has (especially with his far-left activist wife), is a question mark.
Will he side with a president who has exactly zero experience working in the private sector? Will he side with a governor whose energy policies are among the worst in the nation? Or will he side with the people and companies who bring jobs, tax revenue, and energy supply to our state? As I said before, it’s not just energy, but also technology, which will be broadsided by the income deferral and other tax provisions proposed by the administration. With Colorado’s unemployment rate having reached a more than twenty year high in July (followed by a modest improvement in August), will Michael Bennet (affectionately dubbed “Senator Who” by some) vote the way the out-of-touch elites and radical environmentalists want him to, or will he – for once – stand up for common sense and the well-being of Colorado and Coloradoans?
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