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Energy Transfer Partners, L.P. Message Board

  • marcchen888 marcchen888 Feb 28, 2009 1:34 PM Flag

    When Obama start to tax MLPs like C-corps,

    I think it's a given that Obama will soon end the tax advantages for MLPs soon, given his recent policy changes and huge US government deficit.

    My question is that if he ends the MLP tax advantages, can MLP still maintain their distribution levels?


    Some of you might remember that Canadian government ended tax advantages for their Oil&Gas royalty trusts; that event was called the Halloween mascre because all those stocks sank like rocks.
    Because without that tax advantage, those trusts can no longer maintain distribution levels.

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    • Clinton tried to end. He was able to force MLPs that are not energy related to convert back to c status.

      I doubt that congress will end the MLP status of these energy-related entities. Canada is facing a crisis with the end of the tax status for energy related entities.

    • Regarding Canroys:
      they sank like a rock on the day after Canadian governement decided to tax them in 2011; so they didn't cut their distributions yet, and already your principle is slashed by 1/3 in 1 day.

      Why I think Obama, and democrats will go after MLPs:
      I work in the high tech industry, which is significantly dependent on new venture capital investment; Obama recently proposed tax change will additionally tax investment partnerships such as venture capital investment companies; this will dramatically reduce new investments, which is an engine for new high paying jobs.
      Obama and democrats are self-righteous and have no understanding of how economy works. They will put a new tax wherever they feel like.

      I voted for Obama, and persuaded many people to vote for him, because I can't stand Bush, Chaney, etc. idiots who are wasting hundreds of billions on Iraq war.

      But now, I think that we need a mass protest to let Obama know that he won because most americans hated Republicans for the Iraq war; he is not elected increases taxes to wreck the economy, when we are standing on the edge of a Great Depresssion.

      • 1 Reply to marcchen888
      • "But now, I think that we need a mass protest to let Obama know that he won because most americans hated Republicans for the Iraq war;"

        At the time of the elections, the war was playing 2nd place to the economy. He was elected because he offered greater hope for a recovery.

        There isn't going to be any mass protest because some high paying jobs allegedly created by airy-fairy venture capitalists are at risk. Right now we're talking about getting people back to work doing fundamental things.

        If you and your ilk have to spend a few years doing some real work for real wages while paying real taxes, noboy's going to shed any tears. Money for rea, meaningful research & development (e.g. stem cell research) will be there with or without you.

    • You are providing somewhat misleading information re Canroys: "Because without that tax advantage, those trusts can no longer maintain distribution levels."

      The trusts have cut distributions because the price of oil has sunk, not because of the taxation issue. The taxation doesn't phase in for a few more years, so none of the Canroys have had their payouts stressed by higher taxes yet. It is true that if the taxes are implemented, the trusts will not be able to pay out as high a ratio of cash to unitholders because more will be going to the government, but it hasn't happened yet.
      The obvious answer to your question: "My question is that if he ends the MLP tax advantages, can MLP still maintain their distribution levels?" is of course not. Distributions would have to be cut by approximately 35% to pay the taxes. But since you are paying some tax on MLP distributions now, the net effect to you would be somewhat less than that; the distributions would be dividends and double-taxed rather than single-taxed now.





      I think it's a given that Obama will soon end the tax advantages for MLPs soon, given his recent policy changes and huge US government deficit.

      My question is that if he ends the MLP tax advantages, can MLP still maintain their distribution levels?


      Some of you might remember that Canadian government ended tax advantages for their Oil&Gas royalty trusts; that event was called the Halloween mascre because all those stocks sank like rocks.
      Because without that tax advantage, those trusts can no longer maintain distribution levels.

    • IF and its a big IF Obama were to somehow end the current tax structure of MLPs......

      Wouldn't that then make them non-taxable investments in 401s & IRAs?

      Wouldn't that create a significant demand?

    • You take it as a given that Obama will go after MLPs bigtime; I don't. He's going to have enough problems trying to get rid of mortgage/charitable deductions to try and end MLP tax treatments any time soon. Remember that he has at best one year before the 2010 election campaign begins. And if you think the left wingers are going to score in 2010 like they did in 2006, forget it. The word in 2010 is JOB Creation not higher taxes.

      • 1 Reply to hachi05man
      • As I think about this further I note a)the subject of MLP taxation came up in the 2008 and it was glossed over by the Democrats b) "Big Oil" which is more international is losing tax preferences under the Democrats and c)A lot of politicians including most recently Sen Harry Reid,Senate Majority Leader, have been crying about all the USA $Billions going to Hugo Chavez,the Persian Gulf, and other "unstable areas"... So basically, the Obama,Pelosi,Reid Team is driving up the price of imported energy to encourage more fuel efficient vehicles and domestic production. And since natural gas produces less harmful emissions when burned than either oil or coal and is USA sourced, I suggest that natural gas produced here will be regarded as "Golden" and left alone. I think it also telling that imported liquid natural gas is getting blocked almost everywhere in the USA by "safety concerns". Lastly, all those nice Democrat states like Pennsylvania and other Eastern states aren't going to stick their citizens with higher natural gas prices as they convert over from fuel oil. So, I think beating up on MLPs will not happen anytime soon and will keep adding to my ETP investment. Since you disagree, please keep selling your ETP stock so I can buy it more cheaply.

 
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