Ryan Opposes Energy Bill that Hurts U.S. Competitiveness, Boosts Dependence on Foreign Oil
First District Congressman Paul Ryan expressed concern about H.R. 6, a bill that passed the House of Representatives today that would raise taxes on U.S. production of oil and natural gas, encouraging heavier dependence on foreign energy and costing America manufacturing jobs in the process. Ryan voted against this measure because he believes America must decrease its reliance on foreign oil and refined fuel products, for both security and economic reasons, and that this legislation will have the opposite effect. He also noted that higher taxes could end up being passed on to consumers in the form of higher gasoline and home heating costs - an unnecessary burden that Wisconsinites should not have to bear.
"We should be improving our energy independence at the same time as we develop renewables and alternative fuels. Unfortunately, this misguided legislation targets U.S. oil and gas businesses with higher taxes, putting them at a disadvantage compared to OPEC and other foreign producers. Ultimately, this approach raises gas prices and drives good jobs and investment overseas," Ryan said. "The last thing Wisconsinites need is higher gas and energy prices. That's why we should encourage more domestic production including alternative fuels, boost U.S. refining capacity, and streamline our nation's overly complex gasoline system to prevent price spikes."
The legislation that passed the House today (H.R. 6) excludes the oil and gas industry from manufacturers' tax relief (Section 199) contained in the American Jobs Creation Act of 2004. The 2004 law provides a deduction which lowers taxes for all manufacturing income, and H.R. 6 would deny this deduction to domestic energy exploration and production - a $6.5 billion tax increase between 2007 and 2016.
"If you listen to the rhetoric in Washington, it sounds like oil and gas production was given special tax treatments that are now being taken away. This is false. Instead, this legislation singles out oil and gas production as the only exception among domestic manufacturing industries to pay higher taxes. This will undoubtedly increase our dependence on foreign oil and gas," Ryan said.
The goal of this tax policy was to keep manufacturing jobs in America by taxing domestic production at a lower rate than foreign production. This bill singles out American oil and gas production by taxing it at the higher foreign rate.
Finally, this legislation leaves the door open for irresponsible use of tax dollars. It would place the revenue generated by the tax hikes on domestic energy producers into a new account to be used for funding unspecified future legislation that promotes alternative and renewable fuels and energy efficiency; however, there is nothing in the bill that would guarantee that the increased revenues would be spent on alternative energy. This slush fund calls to mind the Carter-era Synthetic Fuels Corporation, which the Wall Street Journal recently described as "one of the more notorious Washington boondoggles of all time, having spent $2.1 billion of tax dollars on alternative fuels before declaring bankruptcy." (WSJ, 1/16/07)