According to new analysis by the American Institute for Economic Research, federal tax revenue fell $138 billion last month compared to just one year ago. News headlines will likely focus on how the drop could severely hinder Washington’s ability to pay down the projected $1.7 trillion budget deficit. That’s missing a major point -- how the drop will impact American workers’ outlook for prosperity and retirement.
Pundits will also certainly ignore the role our oil industry could play in easing these problems. Let’s look at both issues.
First, the economic crisis has slashed the 401Ks, IRAs, retirement funds, and pensions of hard working Americans. Individuals from all parts of our economy -- teachers, auto parts makers, truck drivers, office workers, even members of the clergy -- have seen their nest egg shrink by 40% or more, as their retirement is threatened by underfunded pension funds.
How widespread is this problem, and how can the oil industry help? A recent study by former Clinton economic advisor Robert Shapiro found that over 80 percent of oil company shares are owned by pension funds, endowments, individual investors and asset management companies with mutual funds. This means that a major part of restoring the investments of retirees, union members, and every other person saving for the future lies in how politicians view and treat our domestic energy companies.
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They could take a big step to resolve these problems by simply expanding access to our vast oil and natural gas reserves. Yet politicians have, instead, decided to disparage this vital industry, the work it does, and the contribution it makes to the American economy.
One section of the federal climate change bill now being debated in the House calls fossil fuels a "clear and present danger" and a “threat” to our nation. That’s nonsense. It’s posturing. Oil and gas are vital to economy and national security. Enacting policies that penalize on the industry that supplies those critical resources is counterproductive. And the name-calling is just petty.
The unjustified political bias against traditional sources of energy has resulted in other dubious attempts to generate revenue. In the past five months alone, at least 16 states have raised income, business, sales and excise taxes. And another 15 are considering doing the same. In addition adding to consumers’ already high financial burden, many of lawmakers’ latest attempts to scrounge for revenue go against convention, to say the least:
• California is considering legalizing marijuana and then taxing it;
• Georgia lawmakers may impose a so-called “pole tax” on customers at erotic dancer bars;
• Virginia plans to start taxing hotel movie rentals;
• Providence, RI wants to charge a “student-impact fee” of $150 per student per semester at Brown University (singling out this institution from other schools in the city);
• New York City may tack on a five-cent fee on plastic shopping bags; and
• Minnesota’s Democratic Party has even suggested the state eliminate the tax deduction for an organ donation.
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Legislators need not nibble around the edges to generate revenue for their states. They can simply grant U.S. energy companies access to the vast oil and natural gas reserves off our shores, thereby generating $2.3 trillion in new tax revenue for federal, state, and local governments while also creating 1.2 million new, well-paying jobs and providing a shot in the arm for our slumping economy.
It will also boost the value of 401Ks, IRAs, and pension funds by spurring the economy and strengthening companies in many different sectors.
Unlike name-calling and negative proposals, the steps to boost America’s economy are simple: increase opportunities for domestic energy production and avoid policies that would saddle companies with a greater tax burden.
These straightforward policies are not only popular (the majority of Americans -- even the majority of Obama voters -- support increased access to offshore drilling); they’re also effective. And with our retirement at stake, that’s just what America needs.