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And while MLPs are formed for a number of reasons, it is the flow-through tax structure that makes them such an effective vehicle for energy infrastructure investment. Flow-through taxation lowers the cost of capital for a capital-intensive industry.
Since that time in 1987, MLPs have gone to work. Midstream MLPs own and operate about 300,000 miles of pipelines — natural gas, liquefied gas, refined product and crude oil pipelines — and they supply the backbone of the country’s domestic energy system. These critical activities also have the added benefit of supporting about 323,000 quality U.S. jobs.
Any tax reform effort that would eliminate the flow-through tax treatment of MLPs would significantly and adversely affect future investment in our nation’s energy infrastructure and send a negative ripple effect throughout our economy because of higher energy costs (as well as major job losses).
It’s our hope that the United States’ energy economy and the goal of achieving energy independence become the highest priority for policymakers. We have such a historic opportunity to succeed in this regard and truly become a global leader in energy supply.
For these reasons, we are confident that leaders such as Baucus and Camp, and legislative champions such as Rep. Kevin Brady, R-Texas, will navigate the challenges of the reform process once more and build a 21st-century tax code that maintains the MLP tax structure.
Mary Lyman is executive director of the National Association of Publicly Traded Partnerships.