FOR IMMEDIATE RELEASE
September 10, 2008
Brian Kennedy (202) 621-2951
Independent Economic Analysis: Gang of Sixteen Plan Results in Loss of 637,000 American Jobs, Lower Wages for Workers, and More
Washington, DC – The Institute for Energy Research (IER) today unveiled a study done on its behalf by Fiscal Economics, Inc. which concludes that the tax hikes in the “Gang of Sixteen” energy plan would result in an increase in U.S. imports from unstable foreign oil regimes, a loss of 637,000 American jobs, cost households nearly $35 billion, and reduce total U.S. economic output by $186 billion in the first ten years alone. IER president Thomas Pyle issued the following statement:
“We didn’t need an intensive economic analysis to conclude that tax hikes on domestic energy producers increase imports, kill American jobs, and lower the country’s economic output, but we did need one to determine the true extent of those consequences. This analysis puts into real terms the effect this proposal would have on real people and our economy. As other countries around the world are taking steps to attract new investments in energy production, imposing tax hikes likes like those outlined in the Gang’s plan would have the opposite effect here at in the U.S. In short, the Gang of Sixteen’s plan is an $85 billion energy bridge to nowhere. Its benefits can only be said to be political or rhetorical, as its implementation would only lead to an increase imported oil, consumer prices, and the exportation of American jobs.”
The key findings of the study, Estimating the Tax Burden and Economic Impact from the Proposed “Gang of Ten” Revenue Offsets, are as follows:
- Impacts on Economic Output: Projections in previously proposed measures to eliminate the Section 199 deduction for the petroleum industry estimated it would raise $13.57 billion over 10 years. $9.5 billion of that additional tax burden is estimated to fall on workers and $4.07 billion would be borne by shareholders in the form of lower returns. Total U.S. economic output is slashed by $186 billion.
- Loss of American Jobs: Repealing the Section 199 domestic manufacturing deduction for energy producers, which was enacted by Congress in 2004 as part of the American Jobs Creation Act to encourage U.S. companies to increase employment in the United States, would result in the loss of 637,000 American jobs.
- Impacts on Workers in Key Producing States: Workers in three states – California, Texas and Louisiana – would bear $5.3 billion in lost wages, while retirement savers and other investors in California, Florida and New York would bear $1.4 billion in lower returns. These three states would also bear 44 percent (or 352,000) of the total jobs lost.
- Costs to U.S. Households: Part of the tax burden associated with the repeal of Section 199 would fall on U.S. households in the form of lower wages. Specifically, the provision would reduce overall household earnings across the United States by $34.97 billion – or $330 per U.S. household.
To view and download the complete analysis, click here.
The Institute for Energy Research (IER) is a not-for-profit public foundation that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. Founded in 1989, IER is funded entirely by tax deductible contributions from individuals, foundations and corporations. No financial support is sought or accepted from government (taxpayers).