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Morici: Obama's proposal for taxing U.S. oil companies would reduce U.S. economic growth
Howard Richman, 7/25/2011

On July 15, U. of Maryland economist Peter Morici (US debt ceiling deal a prelude to ultimate default) pointed out that President Obama's proposed tax hike for foreign oil companies would actually slow economic growth. He wrote:

President Obama wants to single out oil companies. Specifically, US businesses get credit for foreign taxes paid (not royalties but corporate taxes paid) against their US tax liabilities—he wants that curtailed for oil companies.

Already, foreign companies, unlike US companies, are not taxed by their home governments on oil they produce outside their home country. If the United States follows Mr. Obama’s prescription, even more exploration and development abroad will move to competitors like BP and Royal Dutch Shell. US imports from non-US owned corporations will rise, and future US tax revenues will be smaller and budget problems worse.

Similarly, all US businesses can receive some tax credit for domestically based production and employment. The President wants that taken from oil companies—who are also refiners and manufactures, and undertake considerable R&D. Follow that Rx, and future domestic production, employment and tax revenues will be smaller and budget problems worse.

Morici did not mention it, but Obama's proposed tax hike could also cause U.S. oil companies to move their headquarters elsewhere so that they would no longer be at all liable for paying U.S. taxes on revenue earned abroad.

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