IHS Report: Removal of the percentage depletion tax provision has unintended consequences for U.S. economy, small energy producers and royalty owners
National Stripper Well Association Chairman Mike Cantrell said removing the percentage depletion deduction from the tax code would have unintended consequences for the nation’s economy by harming domestic energy small businesses and royalty owners.
Eliminating the percentage depletion tax provision for U.S. oil and gas producers would cut into economic growth, cost jobs and labor income, and cost the federal government a net $2.5 billion in tax revenue by 2025, and another $1.1 billion in royalty revenue from oil and gas produced on federal land, according to an economic impact assessment released today by the National Stripper Well Association (NSWA). The assessment was produced for NSWA by IHS, a leading global source of critical information and insight.
Percentage depletion is a tax provision used by oil and natural gas producers that allows them to recoup some of the costs involved in exploring for and developing fossil fuel sources.
Over the next decade (2015-2025), the economic impact of eliminating the percentage depletion deduction from the tax code would cost the United States economy $184.5 billion in gross value-added, an average of 178,000 jobs per year and $115 billion in earned labor income, the report said. More