FT: Oil, Gas Producers Among Hardest Hit By US Tax Reforms

U.S. oil and gas producers are among companies hit hardest by new restrictions on tax relief for interest payments, an analysis of the impact of the reforms has shown… […]

Editor’s Commentary:
Corporate tax reform has been long overdue. The U.S. has the highest nominal corporate tax rate of any developed nation in the world, but also a lot of loopholes. Lowering the tax rate while widening the tax base levels the playing field for U.S. corporations, but changes the incentives. I have long been in favor of lower (or zero) corporate taxes because a) pass through taxation is much more efficient to regulators and taxpayers; b) it levels the playing field between corporations of various sizes and tax sophistications, c) it incents equity financing which can help lower systemic risk, d) it mitigates distortions due to the double taxation of dividends which has historically led to opaque payout practices, and e) lessens the potential for tax accounting distortions. Moreover, nothing bad can come of higher corporate profits: higher wages, higher shareholders returns, higher executive pay, etc… (the latter being not necessarily good, but also not entirely bad). Of course, when incentives change, there will be winners and losers, but the net gain to the economy outweighs the potential downsides.

Article Source: Ed Crooks. Oil, Gas Producers Among Hardest Hit By US Tax Reforms. Financial Times. 16 Jan 2018. Original content accessible: https://www.oilandgasinvestor.com/oil-gas-producers-among-hardest-hit-us-tax-reforms-1678641#p=full

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