A group of 24 Senate Republicans have criticized the Biden administration for proposing tax hikes in the 2025 budget that they believe will hinder domestic energy production. Led by Sen. John Barrasso, the lawmakers sent a letter to Treasury Secretary Janet Yellen expressing concerns over the more than $110 billion in tax increases targeting oil, gas, and coal production.
The Republicans argue that such actions would lead to higher energy prices for Americans and allies globally. They accused the administration of weaponizing the tax code against U.S. energy producers and expressed alarm at the belief that utilizing the nation's natural resources could harm long-term energy security.
The Treasury Department's green book accompanying the budget outlines plans to remove tax incentives worth $110 billion from the energy industry. The rationale provided is that current tax preferences distort markets by favoring fossil fuel investments over a neutral system, which is seen as detrimental to energy security and inconsistent with clean energy goals.
Specific incentives targeted for removal include the intangible drilling costs and percentage depletion incentives, which the Republicans argue will chill investment in conventional energy production.
In response to the letter, the Treasury Department highlighted the administration's focus on green energy investments and the Inflation Reduction Act, emphasizing record-high oil production under the Biden-Harris Administration and the surge in U.S. energy production.
Notably, a report from the Department of Energy's Energy Information Administration revealed that renewable energy sources receive significantly larger taxpayer subsidies compared to the fossil fuel industry. Despite accounting for 21% of domestic electricity production, renewable sources like wind and solar power received $83.8 billion in subsidies, the highest among all categories.
Senators including John Thune, Shelley Moore Capito, Tim Scott, Mike Crapo, and James Risch also signed the letter expressing concerns over the proposed tax changes in the budget.
