By: Ralph H. Anderson
September 6, 2010--Albuquerque Journal
In sports they call it a "head fake" — someone pretends to make a move in one direction to throw the opponent off balance, and then heads in the totally opposite direction, to their advantage and to the disadvantage of their adversary.
Seems as if the Obama administration and congressional leaders have been engaging in their own "head fake" with the American taxpayers right now when it comes to energy legislation.
Why do I say that?
Because for many months — since even before Obama was elected president in 2008 — all the talk from Obama, his appointees and congressional leaders of their party about moving toward "energy independence" by reducing the amount and percentage of oil imports from government-owned "companies" based in other nations.
Assuming the president and congressional leaders really do want to reduce oil imports, then it is hard to understand why they have added "creating higher taxes for U.S. oil and gas companies that work abroad" to their to-do list. Yet, they have.
Their new tax proposal is dangerous for the American economy and for American citizens, for several reasons.
The new tax proposal is esoterically described as a "rollback" of a previously enacted tax incentive. (Congress can count on most people being bored or lulled into inattention by the bureaucratic nomenclature of a "rollback on Section 199" (of the Tax Code). Typically, I oppose tax incentives of any type because too often they are rewards for activities that otherwise would be uneconomic – part of the perpetual effort at social engineering or otherwise foolish tinkering with the logical workings of the private-sector economic machinery.
Yet, I am writing this column because of the plain fact that under the proposal, energy taxes will be increased — plain and simple. Call if a rollback or what you will, the tax percentage rate will be increased, which is a tax hike that all Americans, not just our major oil companies, will have to pay.
Furthermore, this tax hike will disadvantage American companies that operate in the global market, putting them at a competitive disadvantage against their foreign opposition. Many of these foreign so-called "companies" are de facto government agencies disguising themselves as "companies."
Nor are our American "Big Oil" companies so big, after all. Our three largest American "majors," it turns out, actually rank 17th, 21st and 23rd in the world. Our Big Three are thus, in reality, among the "smaller three" in global markets, so why in the world would the Obama administration and Democratic congressional leaders want to make it costlier for them to operate than their gigantic competitors?
In addition to the fact that the tax, if approved by Congress when members return to Washington in September, will raise taxes on energy and everything created by energy (virtually everything), there is the logical but worrisome likelihood that the government "companies" I cite will become more successful at exporting into the U.S. Even the Congressional Research Service — the nonpartisan research arm of Congress — says such a tax would "adversely affect domestic production and increase imports."
The fact that the proposed higher tax rate would be unfair, illogical, lead to greater oil imports from foreign-based companies and work against the economic interests of America, its businesses and its citizens doesn't seem to have deterred the ill-conceived tax hike idea from getting within striking distance of being enacted and becoming law.
Time to let your senators, as well as your business colleagues, know about your opposition, before the pro-tax faction scores against the taxpayers and our economy.
