By Brett Clanton

Obama administration proposals to reap more tax dollars from the foreign-earned profits of U.S. companies are not going over well in the Oil Patch.

Billed as a way to make multinational corporations pay their fair share to Uncle Sam, the measures could add millions to the tax bills of some of some of the largest oil and gas companies,
on top of the billions the industry says it already pays each year in taxes.

At the heart of the effort are calls to end certain tax benefits U.S. corporations have enjoyed, including one that allows indefinite deferral of U.S. tax payments on foreign income and another that offers credits against U.S. taxes for foreign taxes paid.

President Barack Obama’s administration also wants to close what it characterizes as loopholes that have enabled U.S. companies to avoid U.S. tax obligations by shifting foreign profits to subsidiaries located in tax haven countries.

The White House says strengthening international tax laws could raise $210 billion over 10 years, as well as create a greater incentive for multinational companies to invest in the U.S. rather than taking their money and jobs overseas.

But companies in the oil and gas industry, along with a chorus of U.S. business groups, say the measures would penalize them by adding costs, make them uncompetitive with foreign companies and possibly force them to downsize.

“Contrary to statements made by the administration, these
proposals will not create U.S. jobs and could even result in
U.S. job losses,” said Stephen Comstock, tax counsel for the
American Petroleum Institute, an industry trade group in
Washington.

The proposed changes make good on Obama campaign pledges to crack down on corporate abuse of the tax system and come as the administration is looking for new sources of revenue to fund government programs and plug ballooning deficits.

While a range of U.S. industries could be affected, the
measures could be acutely painful for oil and gas businesses
since much of their product and profit is derived from foreign
countries.

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