We, the undersigned organizations representing a broad spectrum of Americans, write to provide our insight on recent proposals in both the House and Senate regarding “Windfall Profits Taxes” on the oil and gas industry.

It is no secret that in the last year alone the price of gas for consumers has soared to record  highs, recently topping five dollars per gallon nationally for the first time in history. According  to data from AAA, the national average price of gas is $4.33 as of July 26, which is still $1.17 more than it was last July.

These record prices have been caused in part by domestic policies that have restricted the  production of oil and gas. At the same time, the demand for oil and gas across the globe has  increased. As such, it is understandable that Congress and the Biden administration would want to  alleviate the strain these high prices cause everyday Americans.

In recent weeks, multiple proposals have been introduced in the House and Senate that seek to impose a windfall profit tax on the producers of oil and gas. This includes the Big Oil Windfall Profits Tax Act, which was introduced by Sen. Sheldon Whitehouse and Rep. Ro Khanna. This proposal would tax fifty percent of the difference between the current price of Brent crude oil and the average price from 2015 to 2019 (inflation adjusted after 2022). The tax would be imposed on both domestic production imports, and would be limited to firms that produced or imported an average of at least 300,000 barrels per day.

Additionally, National Economic Council Deputy Director Bharat Ramamurti said that the White House is considering proposals that would tax oil and gas windfall profits to provide a benefit to consumers struggling with higher energy prices. The supposed benefits of such a tax hardly outweigh the negative impact it would have on the economy. According to the Congressional Research Service report entitled Crude Oil Windfall Profits Taxes, such proposals would allow for rebates of just $240 for single filers and $360 for joint filers.

History has shown that a windfall tax is bad policy that would have a devastating effect on the supply of oil in the United States. The US implemented a windfall tax on US oil from 1980 to 1988. According to a report by the Congressional Research Service, this tax reduced domestic oil production by at least 320 million barrels and at most 1.3 billion barrels. This drastic drop in domestic supply increased oil imports and made the US more reliant on foreign oil producers. Today, foreign oil cannot meet our current needs as globally demand has risen. Implementing this tax now
would reduce supply and increase prices, the exact opposite of its desired outcome. If the Biden administration and Congress are serious about reducing gas prices, they should avoid levying punitive taxes on the industry and instead push for measures that will increase production and supply and inevitably lower prices. If we impose a windfall tax on oil producers, the US will produce less oil, not more, driving the price up for consumers and exacerbating oil supply constraints globally, while potentially forcing our foreign allies to utilize Russian oil.

There are several measures that Congress can take to resolve increased gas prices without implementing Windfall Profits Taxes on the oil and gas industry. Lawmakers should consider taking the following actions:

• Opening our diverse resources on federal lands.
• Approving responsible exploration and production.
• Supporting sustainable and expedited permitting.
• Working closely with industry to alleviate constraints on the supply chain and input materials in order for
domestic oil production to increase.
• Increasing the building out of more energy infrastructure.
• Rescinding policies that block the development of and access to new supply, such as:
◦ The Keystone XL pipeline.
◦ ConocoPhillips Alaska oil drilling project that could produce up to 629 million barrels of oil,
furthering America’s energy independence and increasing supply significantly over the next 30
years.

Our organizations agree that making progress on the oil and gas crisis is possible if Congress and the Biden administration
focus their efforts on increasing supply rather than raising taxes. Implementing failed policies like Windfall Profits Taxes
would only increase costs to taxpayers while ensuring gas prices remain high. We thank you for your consideration.

Click here to view online: https://dailytorch.com/2022/08/americans-for-limited-government-opposes-windfall-profits-tax/

 

Gene Marks: Looming change in worker classification rules will cost small businesses big bucks

A lot of attention has been paid to the tax increases that are part of the Democratic-backed Inflation Reduction Act that’s making its way through Congress. And while these increases are concerning to both businesses and taxpayers, there’s another rule coming from the Biden administration that will have an even bigger impact on costs for millions of small businesses: a looming change in worker classification rules.

The new rules will result in changing the status of countless “independent contractors” to employees. So why is that such a big deal?

Small businesses rely on independent contractors to perform ad-hoc and infrequent tasks that usually do not require the attention of full-time employees. Often called “1099 workers” (thanks to the tax form that needs to be filed with the IRS to report payments over $600), these freelancers (or “gig workers”) are stand-alone entrepreneurs who oftentimes serve multiple customers.

They’re truck drivers, software developers, project managers, construction workers, content producers, health care professionals, counsellors and trainers. They belong to professional organizations that support freelancers. Along with millions of others, they get projects and side gigs through platforms such as Fiverr, Craigslist, UpWork and Freelancer.com. Most of these entrepreneurs operate independently as small business owners themselves and earn their entire livelihoods this way. Others enjoy the extra income these freelancing opportunities provide.

But the Biden administration feels that these independent contractors need more protections. And so the Department of Labor (DOL) is taking action.

“The department now plans to engage in rule-making on determining employee or independent contractor status under the Fair Labor Standards Act,” Jessica Looman, the acting administrator for the Department of Labor’s Wage and Hour Division, wrote recently on the DOL’s blog. “We remain committed to ensuring that employees are recognized correctly when they are, in fact, employees so that they receive the protections the FLSA provides.”

The DOL’s new rules will throw away the multiple requirements that have long been used to determine whether a freelancer is truly independent or should be classified as an employee and replace these requirements with a more simplified “ABC Test.” These new rules focus on just three factors:

A: The worker is free from the control and direction of the hirer in connection with the performance of the work;

B: The worker performs work that is outside of the usual course of the hiring entity’s business and

C: The worker is customarily engaged in an independently established trade, occupation or business.

For small businesses, the biggest challenge will be meeting the “B” rule. That’s because, in essence, that specific test basically says a small business owner cannot use a 1099 worker to perform tasks that generate revenue for his business. The work must be “outside of the usual course” of what his company does. So, if he’s going to charge his clients for the services performed by the outside developers and tax experts he uses, then he can’t treat these outsiders as independent contractors.

Instead, he must classify these workers as employees. And that’s a big problem for small businesses. Why? Because it’s a big tax increase. Not only will small business owners have to withhold payroll taxes for these workers, but they’ll also need to pay the employer’s portion of both Social Security and Medicare taxes as well as any related state and local taxes. As employees, they also may be qualified to participate in the company’s benefit plans, which could incur further health insurance and retirement costs.

Sure, these workers will also have protections under the Fair Labor Standards Act. They’ll also have the freedom to unionize (which many opponents are saying is the main driver behind the Biden administration’s actions). But do independent contractors and freelancers really want to be employees? Many contractors prefer to be their own boss and have no desire to be on a payroll. They like their independence. They serve multiple customers. They make their own choices, from billing to the clients they work for and the hours they work.

“We told the Labor Dept. that we want these attacks on our small businesses to stop,” says Karon Warren, co-leader of Fight For Freelancers USA. “There are 59 million independent contractors in this country. We’re a third of the U.S. workforce, and the majority of us are happy. Lawmakers and regulators need to stop their outrageous attempts to misclassify us as employees.”

“The bill could end my ability to be my own boss, set my own hours and otherwise live the American worker’s dream,” wrote Judi Ketteler on NBCNews.com. “According to the ABC test, businesses need to treat someone like me as an employee — with all the rights and benefits that entails — even if I’m writing only a single story for them. Ditto for all types of creatives who support themselves through gigs, like actors, artists and musicians. How many companies will continue to use our services under these circumstances? It’s simply not feasible.”

Ketteler was referring to the PRO Act, a workers’ rights bill (fashioned on California’s controversial AB5 legislation) that failed to pass the Senate back in 2021. Despite this failure, the DOL is continuing to move forward outside of the legislative process using pieces of that legislation, particularly the ABC Test. The department held two public forums on the issue in June, and most experts are expecting finalized worker classification rules by the end of the year.

It’s inevitable that freelancer organizations and other business groups will challenge the ruling in court. There are already many legal challenges. And it’s important to note that the ruling is coming from the DOL and does not impact how the IRS – a separate agency – defines independent contractors for tax filing purposes. So, confusion and chaos are also inevitable.

In the meantime, countless small business owners will be stuck in the middle. Amid inflation, supply chain problems, labor shortages and a continued economic slowdown, these changes could not be coming at a worse time.

Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.

To view online: https://thehill.com/opinion/finance/3586210-looming-change-in-worker-classification-rules-will-cost-small-businesses-big-bucks/