New taxes on domestic energy suppliers could compromise retirement funds for millions of Americans The Obama Administration’s proposed fiscal year 2011 budget imposes nearly US $40 billion in new taxes on the oil and natural gas industry. While some Americans think “big oil” should be heavily taxed, the fact is that many of these same American investors are dependent on revenues from operating companies for their pensions. The oil and gas industry contributes enormously to the very retirement funds now at risk. According to American Council for Capital Formation (ACCF) Chief Economist Margo Thorning, with retirement funds already struggling to stay afloat in current economic conditions, Washington officials would be ill-advised to add additional burdens (like the $39 billion tax increase on oil and gas companies proposed in the White House’s budget) to the US industry contributing so much to millions of pension, mutual, and other retirement funds. A recent study conducted by the Pew Center on the States found state pension funds face a staggering $1 trillion shortfall. In response to these developments, Thorning says Washington needs to re-think its plans to tax operating companies, explaining that it is a bad plan for a federal budget to directly and dramatically impact billions of dollars paid into the mutual funds that state legislatures rely upon to pay for retirement benefits. A 2007 study on this issue by former Clinton advisor Robert Shapiro, found that just 1.5% of America’s oil and natural companies are owned by industry executives, while the remaining ownership belongs to mutual funds and individual investors planning for their own retirement with pension and IRA funds. “With 98.5% of all oil and gas company shares held by individual investors, retirement funds, and management companies rather than industry insiders,” Thorning said, “it’s clear that raising taxes on domestic energy suppliers ultimately harms the tens of millions of average American’s invested in the oil and natural gas industry.” The Shapiro study also explains just how many Americans are affected by the strength and availability of mutual fund assets. According to the study, “28 million public pension accounts in over 2,650 public employee pension funds represent the major retirement security for current and already-retired soldiers, teachers, police and fire personnel, social workers, and office workers employed at every level of government.” The proposed budget would shortchange millions of public servants. The situation, according to Thorning, is dire. “In light of the fact that 40 states have set aside less than 7.1% of the funds required to pay for retirement benefits and half of those have no assets on hand whatsoever to cover payments, the effect an additional tax burden on domestic energy suppliers would have on Americans at this time is far reaching and devastating.”
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