17 Energy Taxes Proposed by Biden and Democrats in the Last Year
Congressional Democrats and the Biden administration are blaming Vladimir Putin’s invasion of Ukraine and greedy, heartless American energy companies for the high price of gasoline.
At the same time, they are pushing countless tax increases that would raise the price of energy. While the Left characterizes these taxes as going after big businesses, they will actually be passed along to consumers, families, and small businesses in the form of higher energy prices.
It seems that the Left lacks any foresight about the consequences of the laws they pass, or they do not care about rising energy prices outside of its political ramifications.
According to the Bureau of Labor Statistics, gasoline has increased by 38 percent in the past 12 months and energy has increased by 25.6 percent in the same period. If Democrats had their way and passed their countless new taxes on energy, the cost of energy would continue to increase.
Below are the 17 energy tax increases Democrats have proposed:
1. Windfalls Profit Tax: $450 billion tax increase
Democrats led by Senator Sheldon Whitehouse (D-RI) and Congressman Ro Khanna (D-Calif.) have proposed a windfall profits tax which would impose a 50 percent tax on the difference between the current price of a barrel of oil and the average price per barrel between 2015 and 2019. This could raise taxes by as much as $450 billion over the next decade and would be used to finance a new welfare payment, that in combination with other Democrat policies, will pay people not to work and drive inflation.
A windfall profits tax has been tried and failed in the past. It was signed into law in 1980 by Jimmy Carter but was repealed eight years later. The Congressional Research Service has noted that the windfall profits tax was “an extremely complicated tax to comply with and administer,” that it generated a fraction of the revenue projected and that it raised the cost of gasoline and increased dependence on foreign oil.
2. Home Heating Tax: $8 billion tax increase
The Democrat multi-trillion dollar tax and spend bill, Build Back Better, included an $8 billion energy tax on natural gas production according to projections from the Congressional Budget Office, a tax that will be paid by American households in the form of higher energy bills.
Democrats have included this home-heating tax in the bill despite retail prices for energy surpassing multiyear highs in the United States. This tax hike will only exacerbate this energy crisis for American households.
3. Energy Tax on Crude Oil: $13 billion tax increase
The Build Back Better plan included a nearly $13 billion energy tax on crude oil, a tax hike that will be paid by consumers in the form of rising gasoline prices.
The bill would impose a 16.4 cents per barrel tax on crude oil and petroleum products beginning in 2022, a tax increase of $12.77 billion according estimates from the Congressional Budget Office. Further, the per barrel tax is pegged to inflation, meaning the tax hike is set on autopilot and will automatically ratchet up each year without Congress having to vote again. As gas prices and the cost of consumer goods rise, so too will the amount of the tax levied.
4. Repeal expensing of intangible drilling costs (IDCs): $10.5 billion tax increase
Biden’s 2022 budget proposal included repealing expensing of IDCs. The expensing of IDCs allows companies to recover costs such as labor, site preparation, equipment rentals, and other expenditures for which there is no salvage value. IDCs often represent 60 to 80 percent of total production costs. This tax hike could result in the loss of over a quarter million good-paying jobs by 2023. As a letter by Rep. Jodey Arrington (R-Texas) and over 50 members of Congress explains, IDCs are neither unique nor lavish tax breaks for the oil and gas industry:
“IDCs are not credits, loopholes, or subsidies. They are ordinary and necessary deductions, and a far cry from the lavish tax credits flowing to wealthy green energy investors and electric vehicle owners. Our tax code is designed to levy taxes on net profits, not on dollars used for operational costs or capital expenditures. Every business since the inception of the tax code, has used cost recovery provisions.”
5. Modify foreign oil and gas extraction income and foreign oil related income rules: $84.8 billion tax increase
Biden’s 2022 budget proposal included a proposal that would increase taxes on foreign oil and gas extraction income for American businesses operating overseas.
6. Repeal enhanced oil recovery credit: $7.8 billion tax increase
Biden’s budget included a provision that would repeal the 15 percent credit for eligible costs attributable to enhanced oil recovery (EOR) projects like the costs of depreciable or amortizable tangible property or intangible drilling and development costs (IDCs). This credit is a bipartisan provision to incentivize carbon capture and sequestration, ultimately leading to less greenhouse gas emissions.
7. Repeal credit for oil and natural gas produced from marginal wells: $516 million tax increase
Biden’s budget plan proposed a repeal of a credit for oil and natural gas produced from marginal wells, which is limited to 1,095 barrels of oil or barrel-of-oil equivalents per year.
8. Repeal capital gains tax treatment for royalties: $455 million tax increase
Royalties received on the disposition of coal or lignite currently qualify as a long-term capital gain. Biden’s budget would repeal this, requiring this income to be taxed at the higher ordinary income rate.
9. Repeal exception to passive loss limitations provided to working interests in oil and natural gas properties (Biden’s budget proposal): $86 million tax increase
10. Repeal percentage depletion with respect to oil and natural gas wells: $9.2 billion tax increase
President Biden’s budget proposal would repeal Percentage Depletion, which allows taxpayers to deduct the cost of oil and gas wells as a statutory percentage of the gross income of such property. This provision is used by small, independent, and family-owned oil and gas companies, and royalty owners like farmers and ranchers.
11. Increase geological and geophysical amortization period for independent producers: $2 billion tax increase
The amortization period for geological and geophysical expenditures incurred in connection with oil and natural gas exploration in the United States is two years for independent producers and seven years for integrated oil and natural gas producers. This proposal in President Biden’s 2022 budget would require these expenses to be amortized over a seven-year period.
12. Repeal expensing of exploration and development costs: $911 million tax increase
Producers of oil, gas, coal, and minerals can fully immediately deduct 70 percent of the costs associated with exploration and development of a domestic ore or mineral deposit. The remaining 30 percent can be deducted over 60 months. Biden’s budget proposal would repeal this provision, requiring these costs to be depreciated over many years.
13. Repeal percentage depletion for hard mineral fossil fuels: $1.3 billion tax increase
Biden’s budget proposal sought to repeal a provision of the tax code that allows companies to deduct 10 percent of their sales revenue to reflect the declining value of their investment.
14. Repeal the exemption from the corporate income tax for fossil fuel publicly traded partnerships: $1 billion tax increase
Partnerships that derive at least 90 percent of their gross income from depletable natural resources, real estate, or commodities are exempt from the corporate income tax. Instead, they are taxed as partnerships. Biden’s budget proposal would repeal this provision for publicly traded fossil fuel partnerships, requiring them to be taxed as corporations.
15. Repeal the Oil Spill Liability Trust Fund (OSTLF) excise tax exemption for crude oil derived from bitumen and kerogen-rich rock: $395 million tax increase
Because crude oil derived from bitumen and kerogen-rich rock are not treated as crude oil or petroleum products, it is exempt from the Oil Spill Liability Trust Fund tax of $0.09 per barrel of crude oil. Biden’s budget proposal would repeal this exemption.
16. Reinstate Superfund excise taxes: $25 billion tax increase
President Biden’s 2022 budget proposal would reinstate the three Superfund excise taxes at double the previous rates: (1) crude oil received at a U.S. refinery; (2) imported petroleum products (including crude oil) entered into the United States for consumption, use, or warehousing; and (3) any domestically produced crude oil that is used in or exported from the United States if, before such use or exportation, no taxes were imposed on the crude oil.
A provision modeled off this proposal was passed in the Infrastructure Investment and Jobs Act, signed into law by President Biden in November 2021. This provision raised taxes by $14.4 billion.
17. Modify Oil Spill Liability Trust Fund financing: $513 million tax increase
Biden’s budget would extend the Superfund excise tax to other crudes such as those produced from bituminous deposits as well as kerogen- rich rock. It would also extend the Oil Spill Liability Trust Fund (OSLTF) tax to include these crudes as well. It would also eliminate the eligibility of the OSLTF for drawback.