During a recent visit to Washington, DC, I found that the mood of the odds for passage of major overhauls of the US tax code by Congress in 2014 was not optimistic. The main reason was the upcoming elections.
Note the following as noted by World Alliance for Decentralized Energy (WADE):
The Obama budget proposes –
1) Permanently extend the production tax credit (PTC) and, starting with projects that begin construction in 2015, the PTC would become a refundable credit, reducing the need for investors to offset taxes. The PTC would become available for electricity directly consumed by producers as well as electricity sold, and solar projects would become PTC-eligible in 2015.
2) The investment tax credit (ITC) would be repealed for projects placed in service after 2016. This applies for both the current 30% temporary credit and the 10% permanent credit.
3) The credit for second generation biofuels would be extended to 2020 and then gradually repealed by 2024. The 30% tax credit for investments in eligible property used in a qualifying advanced energy project, currently limited to total credits of $2.3 billion, would have additional credit authority of $2.5 billion.
4) Multiple provisions would reduce or eliminate tax benefits for oil and natural gas producers. This includes repeal of the Enhanced Oil Recovery (EOR) credit; the credit for marginal well; expensing of intangible drilling costs, deduction for tertiary injectants; exception for passive loss limitation for working interests in oil and natural gas properties; percentage depletion for oil and natural gas wells; and, domestic manufacturing deduction for oil and natural gas production.
House Ways and Means Committee Chairman Dave Camp (R-MI) budget proposes –
1) The credits available for alcohol fuels and alternative fuels (which expired at the end of 2011) and for biodiesel and second generation biofuels (which expired at the end of 2013) would not be extended and therefore effectively repealed.
2) The PTC would be reduced and then eliminated for generation of electricity from wind, biomass and other renewable resources.
3) The ITC for construction of solar and other renewable energy facilities would be repealed. The repeal would affect the tax credit for projects that are completed after 2016, including those that claim the ITC in lieu of the PTC.
4) Repeal of other renewable and alternative tax credits.
5) Repeal of oil and natural gas incentives, including the EOR credit; the credit for marginal wells; exception to passive loss limitation for working interests in oil and gas properties; and percentage depletion for oil and gas wells.
It does not look likely that either President Obama’s or Representative Camp’s proposals will be passed as a whole. However, it is possible that some of the tax reform proposals could be included in other must-pass bills to offset future spending programs or to provide tax credits, according to WADE.
The US Bureau of Labor Statistics states that the number of news jobs in the oil and gas sector has increased by 270,000 between the years 2003 and 2012. The oil and natural gas industry is a driving force in America’s economy. We need to support our oil and natural gas industry. This support leads to America’s Energy Security!
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