Producers Attack Bradley's Plan to Cut Tax Breaks
The Independent Petroleum Association of America came out
strongly against a tax proposal presented earlier this week by
Democratic presidential candidate Bill Bradley that would do away
with several loopholes currently benefiting oil and gas producers.
Bradley promised last Tuesday that if he's elected president he
would shut down corporate tax shelters and loopholes resulting in
an expected revenue increase of $125 billion over 10 years. Such
special tax favors to big business force average Americans to pay
more, he said. Bradley, a former New Jersey senator who sponsored
the 1986 tax bill and its loophole closures, detailed his own tax
plans at a luncheon with New Hampshire business leaders on Jan. 4.
"For a person who served for so long on the Senate Finance and
Energy and Natural Resources Committee, it is unfortunate that Sen.
Bradley fails to understand the difficulties facing domestic oil
and gas producers, the industry at large and the role that tax laws
play in allowing companies to retain capital they need to keep
producing in the United States," said IPAA Chairman Jerry Jordan.
The bulk of the new revenue produced by Bradley's tax plan is
expected to come from tougher enforcement of the existing tax code
through stepped-up audits of large corporations and increased
penalties for illegal tax-avoidance business transactions. However,
among other things his proposal would do away with about $2 billion
in "subsidies" to hardrock mining companies, oil and gas producers
and ranchers grazing livestock on federal land.
One provision he would repeal currently allows oil and gas
producers, as well as hard rock miners, to claim an up-front tax
deduction for intangible exploration and development drilling
costs. He also would repeal the 1990 15% tax credit for enhanced
oil recovery costs. Bradley claims the two provisions cost
taxpayers more than $200 million per year in lost revenue.
IPAA's Jordan said the current tax code gives producers "the
ability to retain the capital they need to maintain the continued
development of domestic resources. Given the realities of the
international market place, the tax code is one effective tool
producers can use to compete with large foreign government-owned
oil companies. It also recognizes the need to maintain a strategic
domestic component to U.S. oil and gas supply.
"By eliminating tax elements in that code that were carefully
crafted over many years to assist domestic producers in maintaining
and developing oil and natural gas production, Bradley's plan would
further damage the industry's production the country needs to fuel
its vibrant economy and to safeguard its security," he added.
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