Leasing & Tax Policy Proposals Threaten U.S. Energy Independence

By Senator Steve Hinebauch (R-Wibaux); Senator Kenneth Bogner (R-Miles City); Representative Jerry Schillinger (R-Circle); Representative Brandon Ler (R-Sidney); and Representative Bob Phalen (R-Glendive)

In Montana, we are far away from the hustle and bustle of Washington.

Instead of busy streets and crowded communities, our state is full of pristine mountains, flowing rivers, and vibrant ecosystems. Montana’s environment is the envy of states across the country, and we must be sure that any policy that comes forth in our nation’s capital does not impact our state’s natural resources and the benefits they bring to our communities.

Unfortunately, there have been some federal policy proposals related to oil and gas permitting and taxes put forth that will negatively impact Montana’s jobs and revenue — and more gravely, will damage American competitiveness and our nation’s energy independence. As elected officials of our fine state, we want to make it clear that we will stand against any such policies that threaten Montana’s workers, families, and communities, and the industries that support them.

Montana joined 12 other states in a lawsuit against the federal government after they decided to enact a pause on the issuing of any oil and gas drilling permits on federal lands and waters. Although a federal judge has recently ruled in the plaintiff’s favor, halting the leasing moratorium and declaring that it would cause undue harm to energy states like ours, nothing is finalized yet. If the aggressive climate agenda outlined by President Biden continues to be pursued, then a permanent leasing ban may certainly be on the cards.

We can’t let that happen — Montana would lose hundreds of millions in revenue that currently funds our schools, hospitals, and infrastructure. The oil and gas industry brings a host of benefits to residents in every part of our state, directly supporting nearly 30,000 jobs and producing almost $250 million in state revenue. Montana’s General Fund Budget, which provides large contributions for education and conservation initiatives, receives nearly 6% of its funding from oil and gas operations.

A leasing ban also hurts our domestic energy development at home. We are blessed to have a vast abundance of natural resources here in Montana — it truly is God’s country. However, a leasing ban means that we are blocking our companies from accessing our resources. It is bad for Montana’s workers, budget, and our communities. We cannot become reliant upon foreign sources for our energy, doing so raises energy costs on consumers, harms our national security, and leaves us at the whim of other nations.

Beyond federal leasing policy, the White House and other federal officials have proposed raising taxes as a way to fund the hotly-debated infrastructure bill. Specifically, they want to raise the corporate tax rate from 21% to 28%, and the Global Intangible Low Tax Income. (GILTI) rate from 10.5% to 21%. Increasing these tax rates would only place extra burdens upon the companies and businesses that help power Montana’s economy.

Coupled with a leasing moratorium, these tax increases could spell doom for the financial well-being of Montana’s small and large businesses alike. Raising the GILTI tax, a fee designed to keep the tax profits of multinationals in the United States, is especially problematic for our nation since it would limit American competitiveness abroad. The current 10.5% GILTI rate is half of the current corporate rate – as designed. In determining this figure, the Senate Budget Committee recognized that taxing GILTI at the “full U.S. corporate tax rate may hurt the competitive position of U.S. corporations relative to their foreign counterparts.”

The proposal to reform the GILTI rate also imposes undue burdens upon companies with smaller international operations and the government itself as they need to calculate what is owed country-by-country, rather than one flat sum. It makes no sense to place both tax and administrative-related burdens upon our nation’s enterprises, especially during a time of economic recovery.

Montana’s communities depend on oil and gas revenues to fund important services. We must be sure that intended policy consequences do not harm the residents and limit the economic growth of energy states like ours. We urge our nation’s lawmakers to consider common-sense, all-of-the-above energy policy that does not harm industries critical to communities everywhere.

Senator Steve Hinebauch, a rancher, serves as a Republican member of the Montana Senate, where he represents District 18.

Senator Kenneth Bogner, a former Marine, serves as a Republican member of the Montana Senate, representing the 19th District.

Representative Jerry Schillinger, a farmer, serves as a Republican member of the Montana House of Representatives for District 37.

Representative Brandon Ler, a business owner, is a Republican member of the Montana House of Representatives for District 35.

Representative Bob Phalen, a farmer, serves as a Republican member of the Montana House of Representatives for District 36.