The American Gas Association (AGA), which represents natural gas utilities, said it was encouraged by the deal that President Obama and congressional Republicans have reached to extend the Bush-era tax cuts, including a reduction in the maximum dividend tax rate to 15% for an additional two years.
“This agreement preserves current lower dividend tax rates, providing needed certainty for America’s energy utilities and their investors who rely on stable, predictable dividend income. AGA also looks forward to working with all parties to support the president’s stated long-term goal of creating tax parity between dividends and capital gains, and taxing them at lower rates than ordinary income,” said AGA CEO David Parker.
“To ensure that all investors are protected, Congress should quickly pass this legislation and send it to President Obama for his signature,” he said.
While the provisions on capital gains and dividends are important, Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, said he wasn’t certain if provisions that were more specific to the oil and natural gas industry — such as suspension of limitations on percentage depletion for oil and gas from marginal wells — were part of the deal because the “details of it haven’t been released” yet.
“We don’t know if there’s an ‘adverse pay-for’ in this package” for oil and natural gas, he said. Energy analyst Christine Tezak of Robert W. Baird & Co. signaled that offsets, which were hoped to be “off the table,” could yet reappear to pay for the tax extensions. “Carried interest and changes to tax preferences enjoyed by the oil and natural gas industry may still be at least offered in the upcoming debate,” she said.
“That’s possible,” said Fuller, agreeing with Tezak’s statement.
“There’s a lot of opposition to this [tax] package” primarily from liberal congressional Democrats, Fuller said. But he believes there’s a “good chance it will be passed unless Democrats are willing to go against Obama.”
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