On May 25, the PA Chamber sent a letter to Pennsylvania’s delegation in the U.S. House of Representatives, expressing opposition to proposals from the White House and Democratic leaders in Congress that would raise the federal corporate tax rate and impose punitive changes on oil and gas tax law. The letter, which was enclosed with the Chamber’s April 27 testimony to the US Senate Finance committee on similar subjects, highlights the significant job and wage gains achieved in Pennsylvania following the passage of the Tax Cuts and Jobs Act. The letter also notes that the proposed oil and gas tax policy changes would disproportionately impact independent companies who are the leading producers of natural gas in Pennsylvania and have contributed to significant reductions in emissions and energy costs.
The Biden administration’s proposed American Jobs Plan, an infrastructure and spending bill, would be paid for by raising the federal corporate rate from 21 percent to 28 percent while leaving in all the base broadeners from the Tax Cuts and Jobs Act of 2017, which were included to pay for the rate reduction. The U.S. Senate Finance committee convened last week to mark up the Clean Energy for America Act, which would, in a technology-neutral manner, finance tax credits for any zero-emission energy resource. The proposal would finance the tax credits by repealing the ability of oil and gas companies to deduct intangible drilling costs, use percentage depletion or form master limited partnerships. As the PA Chamber noted in testimony and the letter, intangible drilling cost deductions are similar in concept to bonus deprecation for research and development in other industries. At the Finance committee’s meeting to amend the Clean Energy for America Act, ahead of possible Senate floor consideration this summer, Sen. Toomey offered an amendment to preserve intangible drilling cost deductions and made extended remarks in support of the industry’s contributions to economic and environmental gains. The amendment failed on a tie vote and the bill advanced out of committee.
Given the significant contribution of shale gas to America’s energy independence, emissions reduction leadership, energy security, as well as the continued need for significant investment into oil and gas even in a carbon-constrained policy environment, the PA Chamber believes such changes are in opposition to the economic and environmental interest of our state, region and nation.
The PA Chamber also responded to a question from Ohio Senator Rob Portman, who asked if our organization agreed with concerns identified by the US Treasury Inspector General that administration of 2009 stimulus tax credits for renewables resulted in the potential for significant waste, fraud and abuse. The PA Chamber noted its concern over direct pay provisions for tax credits and encouraged the Senate to work with FERC and PJM over the potential implications of incorporating additional energy tax credits into competitive electricity markets in a just and reasonable manner.