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Scott James

Once again, the decisions of Washington bureaucrats reveal just how out of touch they are with the rest of America.

In a bid to pay for infrastructure, some lawmakers are aiming to increase the Global Intangible Low Tax Income (GILTI) rate. This is an unnecessary policy decision that would set back our nation’s recovery and result in higher costs for consumers, reduced wages and fewer jobs.

A GILTI increase is of particular consideration for Weld County as our most critical industry would be irreparably harmed. Weld County is the number one producer of oil and gas in Colorado — 87% of all crude oil production and 45% of all natural gas production comes from Weld County. Our communities have benefited immensely from the royalties collected from oil and gas operations, which totaled $1 billion in 2017 and go toward funding schools, social assistance programs, parks and water infrastructure.

The oil and gas sector is also a significant provider of jobs for Weld County residents and others throughout Colorado. According to the American Petroleum Institute, oil and gas supported 69,000 direct jobs and 271,000 indirect jobs and contributed close to $50 billion to our state’s economy in 2019.

As many Americans begin to travel again by taking road trips, hopping on trains, and flying, our nation’s energy resources have never been needed more. Domestic production here in Weld County and elsewhere in the United States will be crucial in sustaining our nation’s recovery from the pandemic and ensuring our local communities and economies stay afloat.

Unfortunately, the growth and development of Weld County’s oil and gas industry is at risk of being restrained through an increased GILTI rate. The oil and gas sector —as well as other essential industries — will be forced to reallocate funds to afford this extra tax burden, resulting in lower wages and fewer job opportunities for Colorado workers in every corner of the state.

GILTI is a tax placed on the foreign profits of American companies. It is designed to mainly impact large tech companies, which hold intellectual property (IP) and other non-tangible assets. But it also impacts other sectors like manufacturing, energy and other critical supply-chain industries. If the proposed increase is enacted, then American businesses of all sizes would be impacted — including small businesses in Weld County who have a foreign presence in their supply chain.

At its current rate of 10.5%, GILTI has done exactly as intended and kept American jobs and earnings right here at home. In 2018, the year after GILTI was finalized, domestic employment by American multinational companies increased by 2.1% to 28.6 million workers. Additionally, employment, investment, research and production in the United States increased at a faster rate in 2018 than the average rate over the past 20 years.

Analysis from the National Association of Manufacturers demonstrates the ramifications of a GILTI increase more clearly. If GILTI is raised, then within the first year of an increase the United States could lose up to one million jobs and $20 billion in economic activity.

There is also the matter of potentially overburdening American businesses and industries with taxes. Discussions are currently ongoing among the United States and other countries about enacting a separate global minimum tax, which would be levied in addition to GILTI. It does not seem prudent nor smart to be thinking about raising GILTI before first sorting out what this other global minimum tax will look like.

Though I welcome investments in infrastructure, it should not come at the expense of Weld County’s oil and gas industry or our Main Street businesses. Instead of increasing GILTI, other avenues to raise federal funds — such as closing the “tax gap” or implementing a carbon tax — should be considered.

Raising GILTI is the wrong move for our country. With so many communities still reeling from the economic effects of the pandemic, we must be careful not to overburden the industries and businesses that keep our communities running. I only hope that our lawmakers recognize that.

Scott James serves as a Weld County commissioner.

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