Tax hikes on the oil and gas industry being pursued by the Obama administration will have a crippling effect on the U.S. economy, says a new report by professor Joseph Mason of Louisiana State University.

In the study published earlier this week, the economics professor found that President Obama’s proposal in the 2011 budget to repeal tax credits for oil and gas companies will trigger “extensive economic losses” over the next 10 years.

If enacted, the plan could reduce economic output by nearly $341 billion, slash more than 154,000 jobs in 2011 and cut wages by $68 billion. Each year the Obama tax policies are in place, the study says, they would also hemorrhage an additional 115,000 jobs, many of them in the unrelated fields of healthcare and manufacturing.

Obama’s budget proposal calls for rollbacks on two types of tax credits, one under Section 199 of the U.S. tax code, which grants companies the ability to write off 6 percent of their revenue from oil and gas production from their tax liability. This proposal was struck down in a 56-42 cloture vote in the Senate Tuesday.

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While Harry Reid may have allowed the energy tax hikes to die on the floor of the Senate, liberals nationwide have continued their attacks on the energy industry. The Gulf oil spill is barely a fond memory of a moratorium and Democrats are already seizing on the incident to push a host of job-killing, industry-kneecapping taxes and regulations designed to do what they failed to do legislatively: take down the American energy industry.

First the regulations: starting in January, the EPA will begin enforcing a little known provision called the “Tailoring Rule” – a new series of regulations that allow the EPA to dole out permits to carbon-generating companies “allowing” them to pollute in certain amounts, strictly regulated by environmental watchdogs. These regulations don’t just touch the usual suspects, but also renewable energy sources that don’t immediately fall into the “green” category as defined by environmental groups – sources like Maine’s biomass industry, which creates usable energy from environmental waste. Under the EPA regulations, the biomass industry, which was viewed – and treated – up until now, as carbon neutral, would face a host of regulations directed at greenhouse gas producers – regulations that would greatly raise the cost of doing business and could have dire economic consequences for Maine and beyond.

And then there’s the taxes.

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Earlier this month, The New York Times ran a front page article that claimed, “an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process.”  The thesis of the article was that oil companies are the benefactors of enormous subsides, primarily through complicated maneuvering of offshore assets, “tax breaks,” and “loopholes.”

Unfortunately, the copy of the American tax code that The Times used to conduct their careful analysis appears to have been heavily edited by a cadre of left leaning groups, including ACORN President Maude Hurd, Citizens for Tax Justice, Center for American Progress and the Clean Energy Works campaign.

The smoking gun comes in the form of a leaked memo from CEW communications advisor and former Democratic congressional staffer David Di Martino just days after The New York Times ran it’s wildly misguided assessment of U.S. tax policy.

In the memo, Di Martino outlines a strategy to change America’s perception of increased taxes on energy producers as a tax on consumers by arguing “the American people already have a national energy tax — The Big Oil Welfare Tax — in the form of billions of dollars in subsidies to the wildly profitable big oil companies.”  The same day that Di Martino released his memo, Citizens for Tax Justice (CTJ) released their own defective and dishonest hit piece, titled “What Oil and Gas Companies Extract from the American Public.”   The tax breaks referred to by Di Martino and the CTJ memo, in reality, are the same credits that every American company receives for taxes paid overseas to foreign governments on income earned abroad.

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