- Energy Tax Facts
- 13 Jan 14
Hays Post (KIOGA’s Ed Cross): IDCs and Percentage Depletion Important for American Energy
As the American economy continues to struggle for recovery, policymakers and the public need to be aware of the key advantages available to our nation through increased domestic oil and natural gas production.
A recent Harris Interactive poll shows that American voters see great value in a strong domestic energy sector. Nine out of ten respondents said that developing more domestic energy here in the U.S. is important, and 73% support increased domestic oil and natural gas production.
Unfortunately, discussions taking place in Washington threaten to put the strength of American energy at risk. Whenever the debate in Washington turns to spending and debt, some policymakers repeatedly haul out proposals for punitive tax increases on oil and natural gas. This is not a popular idea, according to the poll, which found 81% of voters nationwide believe policymakers in Washington should solve the nation’s budget issues without raising energy taxes.
Tax reform is another area where voters are wary of the potential for harm to U.S. energy production and energy security. When asked about tax reform, 56% of voters said they opposed changes to the tax code that could decrease investment in energy production and reduce energy development in the U.S. versus just 30% who said they would support such actions.
Tax reform may help keep America competitive in a global marketplace, but it must be done carefully. Cost recovery measures, like the percentage depletion deduction and the intangible drilling costs (IDCs) deduction, are neither subsidies nor loopholes but tax provisions critical for American independent oil and natural gas producers to sustain capital availability and formation to promote continued oil and natural gas exploration and production activity. By improving cash flow, these cost recovery measures allows American independent producers to invest more money into creating jobs and producing the energy that keeps our economy running.