Texas pipeline companies are unhappy with Republicans’ tax reform legislation. As Congress nears a critical vote on legislation that would drastically shrink the overall corporate tax rate, pipeline companies are fighting to maintain tax breaks that allow them to deduct the borrowing costs on construction projects that take years to permit and build.
In a letter mid December, the Interstate Natural Gas Association of America (INGAA), which represents the pipeline companies, asked House Republican leaders to adjust a provision within the Senate version of the bill limiting how much interest they can deduct.
“These projects often require capital investments in the billions of dollars, and as a result, significant debt must be incurred to finance these investments,” INGAA President Don Santa wrote. “Failure to address the issues below could result in a higher cost of capital for infrastructure projects in the future, resulting in higher delivered energy costs to consumers.”
INGAA, which has the backing of the American Petroleum Institute, the lobbying arm of the oil and gas industry, is asking not only that the Senate provision be changed but that Congress grandfather existing projects so as not to “make it more difficult for some of our member companies to pay down the debt they already incurred.”
Under both tax reform bills, the overall corporate tax rate would drop from 35% to 20%. At the same time Sen. John Cornyn, R-Texas, the majority whip, inserted an amendment into the Senate tax bill that would benefit shareholders in master limited partnerships, a common corporate structure in the pipeline sector.
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