CEI Joins Coalition Letter Opposed to Repealing IDCs

Dear Majority Leader Schumer, Republican Leader McConnell, Speaker Pelosi, and Republican Leader McCarthy:

The undersigned organizations, representing millions of taxpayers, strongly oppose efforts to raise taxes on American energy. Specifically, we are opposed to discriminatory tax increases that would repeal legitimate cost recovery mechanisms like the ability to immediately expense intangible drilling costs (IDCs). This tax hike would eliminate jobs, raise the cost of energy for American families and businesses, and increase global reliance on hostile nations like Iran and Russia for energy.

For decades, far-left Democrats and activist groups have undertaken a coordinated attack on reliable sources of energy produced in the United States, including oil and natural gas, through schemes like cap-and-trade, bans on hydraulic fracturing, and tax hikes all aimed at “keeping it in the ground.” Most recently, President Biden proposed numerous tax hikes on energy including a tax increase on IDCs in his fiscal year 2022 budget proposal. Senator Bernie Sanders and Representative Ilhan Omar recently introduced legislation that also includes this energy tax hike.

The current tax treatment of IDCs allows American oil and gas companies to immediately expense the intangible expenses associated with drilling a well, like labor. Immediate expensing is not a “subsidy” nor a “loophole.” It is a legitimate cost recovery mechanism that should be made permanent throughout the tax code to encourage investment and job creation across the economy.

The negative consequences of a discriminatory tax increase on IDCs would be felt throughout the economy. One study from 2013 found that President Obama’s attempt to raise taxes on IDCs would have eliminated over 230,000 jobs, reduced oil output by 3.8 million barrels/day, and cut U.S. capital investment by over $400 billion. These impacts would be felt across the country, but especially in states like Colorado, New Mexico, Pennsylvania, Texas, and West Virginia.

Thankfully, for these reasons, efforts to raise taxes on IDCs have been rejected by members of both parties for years.

The American shale industry significantly contributed to our country’s ability to emerge from the last economic recession of the early Obama years – we should not impose discriminatory taxes on this industry now, as it is needed to help us recover from the current economic downturn.

As Congressman Jodey Arrington recently noted in a letter signed by 55 members of Congress, “Using an ‘infrastructure’ package to weaken our energy infrastructure is a grave mistake that will hurt families, farmers, and small businesses still recovering from the pandemic.”

We agree, and we strongly urge Congress to oppose energy tax increases, especially the discriminatory efforts to repeal the legitimate treatment of intangible drilling costs (IDCs) that support good-paying American jobs across the country.


Grover Norquist

President, Americans for Tax Reform

David Williams

President, Taxpayers Protection Alliance

Garrett Bess

Vice President, Heritage Action for America

Ryan Ellis

President, Center for a Free Economy

James L. Martin
Founder/Chairman, 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association

Carrie Lukas

President, Independent Women’s Forum

Heather R. Higgins

CEO, Independent Women’s Voice

Andrew F. Quinlan

President, Center for Freedom and Prosperity

Adam Brandon

President, FreedomWorks

Paul Gessing

President, Rio Grande Foundation

Daniel Turner

Executive Director, Power the Future

Brandon Arnold

Executive Vice President, National Taxpayers Union

Myron Ebell

Director, Center for Energy and Environment, Competitive Enterprise Institute

Jeff Mazzella

President, Center for Individual Freedom

Tom Schatz
President, Council for Citizens Against Government Waste

James Taylor

President, The Heartland Institute

Jon Caldara

President, Independence Institute

Mario H. Lopez
President, Hispanic Leadership Fund