The Obama administration outlined a plan Wednesday to eliminate a slew of oil-and-gas industry tax breaks, while extending a key tax credit for renewable energy.
The energy provisions are included in a broad corporate tax reform framework unveiled by the Treasury Department Wednesday afternoon.
“In order to make us more competitive and create jobs here at home, we must reform our corporate tax code,” Treasury Secretary Tim Geithner said in a statement. “The President’s framework would boost growth and provide American companies with incentives to invest in the U.S. while simplifying and cutting taxes for our small businesses.”
The plan echoes President Obama’s longtime call to eliminate tax breaks for oil and gas companies, arguing that the industry receives preferential treatment. The president outlined a plan to cut $39 billion worth of tax breaks over a decade in his fiscal 2013 budget request.
“The tax code currently subsidizes oil and gas production through tax expenditures that provide preferences for these industries over others,” the plan says. “The Framework would repeal tax preferences available for fossil fuels.”
Among other things, the plan would repeal the expensing of intangible drilling costs and percentage depletion for oil and natural gas wells.
Obama’s plan to nix tax breaks for oil and gas companies faces major opposition from many Republicans, oil-state Democrats and the oil industry. Recent efforts to pass legislation to eliminate the tax breaks have fallen short.
But Obama’s tax framework is the latest indication that the president hopes to revive the yearlong fight over oil industry tax breaks, signaling the White House believes it’s a winning election issue.
Republicans have ramped up attacks on Obama over his energy policies in recent months, pointing to rising gas prices. The White House is pushing an “all-of-the-above” energy plan to cut dependence on foreign oil, expand domestic oil-and-gas drilling and invest in renewable energy.
Obama’s tax framework also calls for making permanent the production tax credit for renewable energy, which is set to expire at the end of the year.
The move would “provide a strong, consistent incentive to encourage investments in renewable energy technologies like wind and solar,” according to the plan.
The renewable energy industry says an extension of the production tax credit, which provides a credit for each kilowatt-hour of electricity that is produced, is essential for wind and solar power to flourish.
A study commissioned by the American Wind Energy Association, the wind industry’s trade group, says that expiration of the production tax credit could cost as many as 37,000 jobs.
But Republicans have attacked plans to extend the tax credit. Sen Lamar Alexander (R-Tenn.) recently called the tax credit an unnecessary subsidy for “Big Wind.”
Read more about the framework here.