It’s no secret that our tax system is outdated, overly complicated, and full of loopholes, and anyone in Washington can tell you that tax reform – especially bipartisan tax reform – isn’t easy. But we – a progressive Democrat from Delaware and a conservative Republican from Texas - believe that we can work together on common sense tax reforms, and we’ve found an unlikely place to start: the energy sector.
Almost everyone agrees that the United States needs to increase domestic energy production, and a number of Democrats and Republicans alike have argued for an “all of the above” energy strategy. Unfortunately, our broken tax system is getting in the way, but we have an idea to fix that: we can level the tax playing field for domestic energy projects, from fossil fuels to the latest clean energy technologies, with the Master Limited Partnerships Parity Act, which we introduced this week along with our bipartisan colleagues, Sens. Jerry Moran (R-Kan.), Rep. Mike Thompson (D-Calif.), as well as members of both parties representing a diverse set of districts and states from across the country.
For three decades, the federal government has supported certain energy industries and projects with an innovative provision in the tax code that allows energy companies to form something called a master limited partnership, or MLP. An MLP is essentially a limited partnership that enables business and individual projects to get access to capital at a lower cost than traditional funding approaches, making them highly attractive to private investment. MLPs are taxed as a partnership, but its ownership interests are traded like corporate stock on a market, and they’ve been highly successful in supporting energy infrastructure all around the country.
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