The Senate Committee on Finance Subcommittee on Energy, Natural Resources, and Infrastructure met Wednesday, July 31 to discuss the principles of energy tax reform in light of the upcoming tax reform debate. It has only been a few weeks since TCS applauded Senate Finance Chairman Baucus (D-MT) and Ranking Member Hatch (R-UT) for their ‘blank slate’ tax reform proposal. This process would eliminate all existing tax provisions—including energy—and re-add provisions only if they are proven to be effective and efficient uses of taxpayer dollars. However, as evidenced at the Subcommittee hearing yesterday, it’s looking less and less likely this process will unfold as envisioned.
While the consensus of the Subcommittee was that the code should be simpler, broader, and fairer, little details were given as to how this would be accomplished. The discussion focused all but exclusively on eliminating tax subsidies for the oil and gas industry and extending provisions for the renewble energy industry, like Master Limited Partnerships, a lucrative giveaway already on the books for the oil and gas industry. Instead of looking to end these costly subsidies, lawmakers spent time arguing for their expansion.
Currently, the tax code is a complex web consisting of a litany of energy-related provisions that pad the pockets of special interests. The lawmaker requests to include these costly subsidies in any tax reform package must be transparent and open to the public, as tax reform has too great an impact on every citizen and all facets of the economy to be done anywhere other than in the light of day. Taxpayers deserve to know what their elected officials are proposing and why. But it’s clear some Senators would prefer to keep these deals in the back room. “I’m interested in further pursuing the witness protection program,” said Senator John Moran (R-KS) when discussing the prospect of making his preferred tax expenditures public.
As Congress digs deeper into energy tax subsidies and tax reform generally, we will continue to urge transparency and accountability throughout the process. With nearly $17 trillion in debt and substantial budget deficits, taxpayers can ill afford business as usual within the tax code. Congress must use this opportunity to expose and eliminate the many giveaways and special interest provisions which cost taxpayers billions each year.
Witnesses at the hearing included: The Honorable Christopher A. Coons (D-DE); The Honorable Jerry Moran (R-TX); Phyllis Cuttino, The Pew Charitable Trusts; Dan Reicher, Stanford Law School, Stanford Graduate School of Business; Will Coleman, OnRamp Capital; Margo Thorning, American Council for Capital Formation.