Tax break used by oil pipeline firms costing government billions

Congress is looking at eliminating a tax break used by oil and gas pipeline companies after a study showed it costing the government four times more than previously estimated.

The tax break for ?master limited partnerships? will cost the U.S. government $7 billion in lost revenue through 2016, according to the nonpartisan Joint Committee on Taxation. The increased cost is due to the popularity of the tax-free publicly traded partnerships that have taken over the U.S. pipeline business and are now spreading into the rest of the oil and gas industry.

Examples of MLPs in San Antonio include Tesoro Logistics LP and NuStar Energy Partners.

Canada ended a similar tax break in 2011 and there are proposals in Congress to end it in the U.S. for all but renewable energy companies.

MLP?s don?t pay corporate income taxes because they?re structured as partnerships, and they don?t distribute taxable dividends. Individual members pay personal income tax on any profits, offsetting to some extent the government?s loss of revenue.

Source: Bloomberg

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Mike W. Thomas covers technology/telecom, military, manufacturing/aviation, regulatory issues as well as nonprofits/education.

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