One day after the Obama administration unveiled a sweeping corporate tax reform plan, the oil and gas industry’s top lobbyist went on the attack against the president’s proposal.
Calling it “discriminatory,” Jack Gerard, president and CEO of the American Petroleum Institute, said the administration’s outline was more of a “Swiss cheese approach that we’re trying to get rid of in this country.”
Gerard, speaking on a conference call with reporters, said that the proposal would cost his sector about $85 billion — a tab, he added, that would ultimately cost the country in jobs and investment.
“We strongly support corporate tax reform,” said Gerard, who added that his group would like to work with the administration and Republicans and Democrats on Capitol Hill to enact it. “What we oppose is tax policy picking winners and losers.”
The president’s corporate tax reform package, which would lower the average rate from 35 percent to 28 percent, identified “five companies” within the oil and gas industry, Gerard said, “and said, ‘Let’s go penalize’” those corporations. He did not name the five outfits.
Gerard also challenged the notion that oil and gas companies receive subsidies specific to them. “The industry receives not one subsidy,” he said. And he called the sector one of the largest contributors of revenue to the federal government. “We pay one of the highest effective tax rates,” he said, estimating it at more than 40 percent.
But Brian Siu, a policy analyst for the Natural Resources Defense Council, said he found it odd that API says its industry doesn’t benefit from subsidies.
“If you looked at the tax code, you’d see very specific examples of oil and gas subsidies,” he said. “All the administration is trying to do is bring some of the oil tax treatments into alignment with the rest of the tax code.” In one example, Siu said, oil and gas companies are permitted to count royalty payments to foreign governments as a tax and can get a tax credit.
He said another subsidy aimed at the industry — one that allows oil companies to deduct intangible drilling costs — has been on the books since 1916. “It’s appropriate to say that our tax policy has to evolve with political and market conditions,” Siu said.
Gerard also attacked President Barack Obama for, on the one hand saying he wants to encourage more domestic oil and gas production and then, on the other, releasing proposals that the API president said would stymie that.
“Words are not leadership if not followed by the right actions,” Gerard said.