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IPAA: Issues Remain in Super Committee’s Wake
The oil and natural gas industry can breathe easier — at least for the time being — now that the joint House-Senate super committee has conceded defeat in reaching a bipartisan agreement to cut the federal deficit.
But “the fact that the select committee didn’t come to closure doesn’t mean the issues are going away,” said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA), which represents independent producers.
“The fact that the [super committee] didn’t produce a tax package was the appropriate decision,” he said. The super committee needs to leave the complex issue of tax reform to the congressional tax-writing committees, Fuller said. “If you are going to have tax reform, everything needs to be on the table.”
There are “strong indicators [that] as Congress goes forward it will want to address some type of tax reform” over the next several years, he said. If that reform involves modifications to intangible drilling costs and percentage depletion, it will negatively impact independent oil and gas producers, according to Fuller.
In a letter to the committee earlier this month, IPAA President Barry Russell expressed the group’s opposition to two plans that were being considered to shave $1.2 trillion from the deficit: the elimination of targeted tax breaks for the oil and gas industry, and proposed cuts to the corporate tax rate (see NGI, Sept. 19).
The IPAA and other groups objected to the super committee targeting a single industry to raise revenue, and believes a reduction in corporate tax reform was too complex to be considered at the super committee level (see NGI, Nov. 14).
“It is essential to recognize that not all American businesses fall under the corporate tax rate. Many small American companies file as individuals under the current tax code. For example, the American oil and natural gas industry is incredibly diverse. In fact, independent producers have an average of 12 employees and many of them file as individuals. Therefore, a lowered corporate rate that eliminates deductions can actually result in a net tax increase for these individual filers,” IPAA told the super committee co-chairs.
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