Taxes We Pay

AFPM members currently pay the following taxes or are in jeopardy of losing the following tax credits that other manufacturers receive:

• The Corporate Tax Rate paid by companies in the oil and gas sectors in the United States is the highest of all industries — an average of 41 percent. This compares with the average 26.5 percent overall tax rate for all U.S. manufacturers.

• Section 199 of the American Jobs Creation Act of 2004 provides much-needed tax relief for all qualified domestic manufacturers to help stimulate manufacturing activity in the United States. Proposals have been introduced to eliminate Section 199 only for the oil and gas sector.

• Last In, First Out, referred to as LIFO, is an established accounting method used to determine inventory and has been relied on by many industries since 1939. It has been used to determine book and taxable income for companies that anticipate inflation or rising prices over the course of their operations. It has been targeted for repeal for the oil and gas sector.

• Dual Capacity allows U.S. companies with overseas operations to claim foreign taxes paid on income earned in other countries, and prevents the same income from being taxed twice. The Obama administration has proposed eliminating this tax credit for the oil and gas sector.