Federal tax reforms shouldn’t hurt jobs
In the spirit of reexamining and redirecting efforts at the federal level to improve our economy, and with all the recent talk in Washington about reforming our tax code, I would like to suggest a guiding principle going forward: any tax reform should be fair and should focus on creating new jobs and growing our economy.
Each day at the statehouse, legislators work to see the big picture and the best path forward for Ohio’s economic growth. Each time I come home, I see the real world impact of the decisions we make for the families and small businesses in my district.
The best thing we can do economically for the people of Ohio and the nation is to provide good employment opportunities. The result will be breadwinners who support their families, contribute to their communities and therefore have the resources to take care of those who truly need help.
Here’s where my concern about federal tax reform comes in. There are too many voices calling for higher taxes on the very industries that are most capable of creating new jobs.
Let’s take energy, for example. A study released last summer illustrated that the oil and natural gas industry created 600,000 new jobs in two years, supporting a total of 9.8 million jobs in 2011. Another study from the prominent research and data analysis firm, IHS, recently found that unconventional oil and natural gas activity such as horizontal drilling supports 1.7 million jobs. By the end of the decade, IHS projects that figure will reach 3 million.
We would be hard pressed to identify another industry with equal capacity for job creation. And Ohio is fortunate to sit in the crossroads of shale formations, coal deposits, natural gas pipelines and renewable energy entrepreneurship.
At the same time, America’s oil and gas companies are paying their fair share and even more of taxes. The effective tax rate for American energy companies has been 37 percent over the past five years. The average effective tax rate for S&P companies is just 29 percent.
Historically, oil and gas companies have paid more in taxes at the federal and state level than they have earned in profits for their shareholders.
Remember that every dollar in taxes is a dollar that a company doesn’t have to invest or grow its business. So increasing taxes even further on energy companies would limit their ability to create these new jobs that Ohio needs.
Higher energy taxes would most likely result in higher energy costs for consumers. Raising energy taxes could mean we would pay more to heat our homes, more to fill our gas tanks, more for goods and services that depend on delivery and more for plastics, fertilizers and other petroleum-based products.
Already there are calls in Washington to take away from oil and gas companies the tax credits available to all manufacturing businesses for growing the industry and creating new jobs.
Picking winners and losers is not something we should be doing with our tax code. The President has an agenda of punishing proven, job-creating energy sources like our state’s Utica shale, and instead favoring more failed “green” energy projects.
Energy companies are contributing to our economy and job growth across the country, and right here in Ohio. Raising energy taxes would put a brake on that contribution. Congress should resolve to be much smarter when it comes to tax reform, and understand the real world implications to our families and small businesses.
Rep. Terry Blair represents District 42 in the Ohio House of Representatives. A Dayton resident, he is also CFO of Buckeye Pools Inc.