UPDATE: In Louisiana, the numbers in these projections are particularly nasty. In Louisiana alone, these increased tax burdens would cost over $30,323,937,235 in economic output and $5.5 billion in lost wages from 2011-2020.
ORIGINAL: A study released today by the American Energy Alliance casts a pall on economic expectations for the next year should one element of the president’s agenda make its way into law. LSU economist Dr. Joseph Mason, who chairs the banking department at the E.J. Ourso School of Business, performed the study and projects that some 154,000 jobs will be lost as a result of new taxes on the oil and gas industry the Obama administration proposes.
In the newly released “Regional and National Economic Impact of Repealing the Section 199 Tax Deduction and Dual-capacity Tax Credit for Oil and Gas Producers,” Dr. Mason finds the resulting fallout over the next ten years would include:
- Initial losses of over 154,000 jobs by the end of 2011, not only in the energy sector but across the whole economy;
- More than $341 billion in lost U.S. economic output; and
- In excess of $68 billion in lost wages nationwide.
“As we’ve seen in its 2011 budget and newly unveiled ‘stimulus’ plans, the Obama administration aims to single out U.S. oil and gas firms and raise the cost of energy for consumers by eliminating crucial tax credits to which all taxpayers are entitled,” Dr. Mason said.
“Though politicians think they are selectively targeting ‘Big Oil’ with these energy tax proposals, they would actually devastate thousands of small American businesses nationwide as well as the workers who depend on them. With at least 150,000 U.S. jobs at stake – in fields ranging from healthcare to real estate – it’s clear that the costs of repealing Section 199 and dual capacity far outweigh the potential benefit of increased government revenues that may be derived from the proposal.”
“The discriminatory energy tax increases proposed by the administration will destroy American jobs and raise the price of energy for consumers,” president and CEO of the American Energy Alliance Tom Pyle said. “President Obama’s proposed changes — which would apply solely to oil and gas companies — have little to do with the debate over offshore drilling safety or even energy policy in general. This tax grab merely represents punitive policies that are now finding a place in the sun in the post-BP oil spill crisis political environment.”
Mason used the government’s own economic model – the U.S. Commerce Department’s RIMS II system – to project the impacts of the tax increases. His research is intended to yield very conservative numbers – as evidenced by his estimate of only 8,200 jobs lost as a result of the deepwater drilling moratorium in a July study, little more than a third of the 23,000 jobs projected to be lost by the Obama administration itself. Mason’s estimates, furthermore do not include the effects of the proposed tax increases on individual investors. Should Congress implement the president’s proposals, it’s likely that Mason’s numbers will once again prove conservative.
And it’s entirely likely that the impact on Louisiana resulting from those tax increases will be disproportionate, at a time when the unemployment rate in the state – which had been among the lowest in the nation – is steadily mounting as a result of the president’s moratorium on offshore drilling.