Tax reform is on everyone’s mind in Washington, and for good reason. The United States has always been a global leader in many areas, yet when it comes to the nation’s tax code, our political leaders are realizing that, in many ways, we maintain an antiquated and often burdensome system.
That’s why the commitment of the tax-writing committee chairmen — Sen. Max Baucus D-Mont., and Rep. Dave Camp, R-Mich — to overhauling the tax code is so important: There’s a key link between sound tax policy and creating a business environment that generates jobs and opportunity.
Consequently, it’s critical that lawmakers recognize that one of the most important objectives for a pro-jobs, pro-growth tax system is to help fulfill America’s transformational energy future. A cornerstone for such an effort would be the retention of master limited partnerships so the nation can continue to finance important energy infrastructure projects.
These investments have never been more vital. Recent technological innovations have made it possible for us to unlock vast new supplies of natural gas, allowing the nation to get to the energy it needs today and transforming our energy landscape long into the future. However, without the infrastructure required to connect producers to end-use consumers, the energy renaissance we all hope for will fall short.
MLPs have become an integral way in which our nation’s private sector finances the infrastructure needed to fully use domestic energy resources — leading to greater energy independence for the United States — and to ensure that a wide variety of energy products make their way efficiently and safely from the production fields to U.S. homes, businesses and communities.
In the context of tax reform, it is imperative that the Congress (and the Obama administration) recognizes that MLPs have worked as intended for more than 25 years. Furthermore, MLPs clearly meet each of the qualifying factors that the Senate Finance Committee recently outlined in terms of tax treatments that merit retention:
Help grow the economy. MLPs contribute significant value to the U.S. economy by investing billions of dollars in infrastructure projects, supporting hundreds of thousands of quality jobs and providing a reliable income stream for investors, many of whom are retirees.
Make the tax code fairer. By creating partnership investments that come in affordable units that are liquid, MLPs allow smaller investors to invest in the development of our energy resources while providing the industry with a valuable source of capital.
Promote other policy objectives. MLPs operate in every state, producing, processing, transporting, storing and distributing energy products to meet the country’s growing demands. And to the extent that the vitality of our economy depends on the free flow of energy supplies, MLPs are a catalyst for growth, investment and job creation.
As the current tax reform debate evolves, it is important to note that Washington has thoroughly examined the issue of MLPs in the past. In 1987, Congress considered whether MLPs should continue to be taxed as partnerships or instead be required to pay corporate tax. Congress determined that, while MLPs were not appropriate for all industries, those in the energy industry should continue to attract capital through the use of MLPs.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.