Worth Noting …

A provision within President Obama’s 2011 proposed budget has drawn considerable concern from economists and business leaders from across the country. The provision calls for eliminating the tax credit that U.S. oil and natural gas companies (that do business overseas) receive from the federal government. This tax credit is most commonly referred to as the “dual capacity tax credit”.

It is noteworthy that foreign countries in which a U.S. company operates, already tax the company on any income earned while operating in their country. The tax credit provided to U.S. companies operating in a foreign country is intended to ensure American companies are not taxed twice on the same foreign income. If the provision were to go into effect, the U.S. government would be placing our own domestic oil and natural gas companies at a tremendous competitive disadvantage to foreign energy companies, who of course, are only taxed once.

Not only is this provision damaging to the business structure of American oil and natural gas companies, but it could cause a ripple effect across our entire economy. If the dual capacity tax credit is removed, it would obviously increase the cost of energy for American consumers and businesses. At a time of such great economic uncertainty, the last thing the U.S. should do is implement a policy that will further increase costs on businesses.