Sen. Bernie Sanders, (D-VT) questions former Michigan Governor Jennifer Granholm during a hearing to examine her nomination to be Secretary of Energy on Capitol Hill, January 27, 2021. (Graeme Jennings/Pool via Reuters) Rather than fortify U.S. energy independence, Bernie Sanders wants to undermine it.
With gas prices soaring across the country, politicians should be working to fortify American energy independence and ensure that oil companies are treated fairly compared with other industries. Senator Bernie Sanders and Congresswoman Ilhan Omar must have missed the memo. They’ve introduced a bill to make drilling for oil more expensive.
The “End Polluter Welfare Act,” as they’ve dubbed it, would eliminate a critical tax provision that eases expenses for American oil and gas companies drilling domestically. This bill would eliminate American jobs, reduce wages, and make America more dependent on energy sources in the war-torn Middle East, in addition to raising gas prices.
One of the bill’s most economically harmful provisions would be the elimination of full expensing for intangible drilling costs. Under current law, oil and gas companies can immediately deduct from their taxes the cost of drilling and preparing wells, instead of having to deduct the cost over several years. The Sanders bill would change this by forcing these companies to deduct such expenses, including those for labor and supplies, over a seven-year period, artificially increasing the cost of domestic drilling.
Full expensing is vital to capital-intensive industries such as the energy sector. These businesses spend huge amounts of money and time planning where to drill and buying the resources necessary to get the job done. Allowing them to write off the full expense of their investments ensures that their economic productivity is rewarded, not punished by the tax code.
Repealing expensing for intangible drilling costs would not be a good idea under almost any circumstances, but the effect of Sanders’s bill, particularly if taken in conjunction with other aspects of President Biden’s green agenda, would be to further depress domestic production in the years to come. Sanders might believe that climate considerations are justification enough for that,
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