While some Democratic senators reportedly have said they wanted to keep all Bush-era tax cuts in place for all earners for the time being, Treasury Secretary William Geithner said President Obama would let Bush-era tax cuts for top earners expire in January to help reduce the U.S. budget deficit.
The news comes after some Senate Democrats sided with Republicans in wanting to extend these tax cuts for all earners, expressing concerns about how the expiry of tax cuts would impact a U.S. economy still in recovery.
Tax cuts for couples earning more than $250,000 and individuals earnings over $200,000 would expire early next year. Tax cuts for the middle and lower class would remain in effect. All tax cuts are set to expire at year-end unless Congress acts to extend the cuts.
Economists have expressed concern that the expiry of tax cuts would prompt consumers to rein in spending. Geithner said forecasts are calling for moderate economic growth and growing public confidence.
The oil and gas industry has been monitoring the Bush-era tax cut situation and the implications it might have for its owns efforts to address the Obama administration's FY2010 budget outline calling for $80 billion in tax decreases for the U.S. oil and natural gas industry, the American Petroleum Institute (API) said.
House and Senate Democratic tax writers following Obama's budget request by seeking to roll back tax incentives for offshore oil and gas companies to fund alternative energy projects, conservation and the creation of green jobs.
"These tax increases would discourage domestic oil and natural gas production and could lead to a greater reliance on foreign imports, fewer well-paying American jobs and higher energy costs to consumers. We believe it is important to note that, at a time when we need to work to turn this economy around, these proposals undermine the creation of jobs and this nation’s energy security," API said in response to the proposed tax decreases.
"The American oil and gas industry agrees with President Obama that we need to encourage the development of renewable and alternative sources of energy. However, we strongly believe that it should be done as part of a comprehensive energy policy that encourages the development of all forms of domestic energy," API said.
While Senate Republicans are anticipated to back up oil and gas companies in fighting proposals to cut oil and gas tax incentives, some Democrats may join them as well. An amendment submitted by Bernie Sanders (I-Vt.) to the Senate Finance Committee to repeal $35 billion in oil and gas tax breaks over the next decade was voted down in a recent debate over tax extenders legislation. Those voting against the amendment included Democratic and independent senators such as Finance Committee Chairman Max Baucus (D-Mont.) and Joe Lieberman (I-Conn.).
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