Wintery Knight

…integrating Christian faith and knowledge in the public square

LSU Professor: Repeal of oil industry tax credits will cost 150,000 jobs

From Marathon Pundit.

Excerpt:

Two days ago I participated in a blogger conference call with Dr. Joseph Mason, a professor of finance and the Hermann Moyse Jr./Louisiana Bankers Association Endowed Chair of Banking at Louisiana State University’s E. J. Ourso College of Business.

Since the Deepwater Horizon blowout began spilling oil into the Gulf of Mexico, Mason has been a consistent voice in support of energy industry jobs. A moratorium on drilling in the Gulf could would have devastating results on employment, Mason warns. But that’s not the only threat to energy industry jobs. On Monday Mason released his latest study on tax policy, “Regional and National Economic Impact of Repealing the Section 199 Tax Deduction and Dual-capacity Tax Credit for Oil and Gas Producers.”

Dual-capacity allows oil companies to deduct taxes it pays abroad, something I was able to do when I owned a mutual fund comprised exclusively of foreign stocks. Section 199 allows companies to deduct up to nine percent of their net income derived from domestic oil production.

Okay…so what if the oil industry pays more tax? Well, that puts our nation’s energy industry at a disadvantage. Specifically, Mason argues, “Without it US-based [energy] firms compete on an uneven global playing field against Russian and Chinese firms that receive substantial state support.”

“The higher energy taxes would cost by my estimates,” Mason added, “some $341 billion in lost economic activity and $68 billion in wages.”

Wages means jobs…Just in the next year our economy will lose 150,000 jobs in the next year if President Obama and the Democrats have their way on dual-capacity and Section 199. And they might. Yesterday the Senate struck down an amendment by Florida Senator Bill Nelson, a Democrat who sees the light, to keep Section 199 in place.

As for job losses, where will they come from? Obviously in the Gulf states, but in others too. Texas will lose 38,000 jobs and Louisiana 13,500. But in other states–such as California, the painful effects will be felt as well: 23,000 lost jobs there, as well as 4,000 more in Ohio, Indiana will suffer 3,000 layoffs, and my own Illinois, which is not a big oil producer, will lose 4,500 positions. And that is just in year following the repeal of Section 199 and the dual capacity credit.

I’ll conclude with a quote from Rep. Paul Ryan (R-WI), “You can’t love jobs while hating the people who create them.”

I stole his whole post! I hope John doesn’t mind.

As for job losses, where will they come from? Obviously in the Gulf states, but in others too. Texas will lose 38,000 jobs and Louisiana 13,500. But in other states–such as California, the painful effects will be felt as well: 23,000 lost jobs there, as well as 4,000 more in Ohio, Indiana will suffer 3,000 layoffs, and my own Illinois, which is not a big oil producer, will lose 4,500 positions. And that is just in year following the repeal of Section 199 and the dual capacity credit.

I’ll conclude with a quote from Rep. Paul Ryan (R-WI), “You can’t love jobs while hating the people who create them.”

Filed under: News, , , , , , , , , , ,

3 Responses

  1. Jerry says:

    So you’re for subsidizing oil industry jobs, something that continues our dependence on our Muslim overlords by artificially deflating oil costs, but not for a start-up industry (http://winteryknight.wordpress.com/2010/09/14/stimulus-funded-plant-produces-33000-batteries-that-go-100-miles/) that has the potential to remove our dependence on the middle-east?

    And before you say more off-shore drilling, you already know it’s a pipe dream. Canada has the potential to supply us with oil for decades, assuming we can get enough natural gas to seperate the oil and the sand…

    You don’t find this even remotely hypocrtical?

    • This is an excellent point, and it did occur to me while writing the post. All I am saying is that this is what will happen – if we cut off the tax breaks we WILL lose jobs during a recession. I am not endorsing subsidies for any business, but this may not be the right time to end the subsidies. I do think we should be loosening restrictions on nuclear power and ANWAR drilling and I think that would be beneficial to the very well-argued national security threat you mentioned.

      But what caused me to go ahead and post it was this line from the editorial:

      Specifically, Mason argues, “Without it US-based [energy] firms compete on an uneven global playing field against Russian and Chinese firms that receive substantial state support.”

      So you have many excellent points, and probably the better case. And yet you were very gracious in taking me to task. I’m inclined to admit I was wrong to post it.

      I think a better idea would be to get rid of the subsidies and reduce corporate tax rates to Canadian levels – from 36ish to 20ish.

      • Mary says:

        I agree that Jerry makes a good point here.

        But I’m glad you posted this because it helps us to make the comparison when Jerry brings up the points he does and see the complexity of the issue of subsidies.

        And it’s also cool to see the way the two of you responded to each other in a civilized manner. Yay!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Click to see recent visitors

  Visitors Online Now

Page views since 1/30/09

  • 4,503,159 hits

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 2,154 other followers

Archives

Follow

Get every new post delivered to your Inbox.

Join 2,154 other followers

%d bloggers like this: