Senate Democrats Want More Oil Tax Dollars
Senate Democrats looking for a solution to the national debt problem are homing in on the oil industry as a source of revenue. Just as many Americans are starting to see some relief at the pumps, Sens. Robert Menendez (NJ), Sherrod Brown (OH), Claire McCaskill (MO), and Jon Tester(MT) are proposing a bill that would close a "loophole" currently used by the top five oil companies in the U.S. to ease their tax burden.
The amount of money involved is approximately $4 billion yearly, and this bill is coming on the heels of reports that the top five companies had posted $36 billion in profits during the first quarter of this year. Senate Majority Leader Reid openly stated that this bill is aimed at the top five - BP PLC, Chevron Corp., ConocoPhillips, ExxonMobil Corp., and Royal Dutch Shell PLC - because he and his fellow Democrats in the Senate apparently view this tax break for the oil companies as corporate welfare.
Portraying the oil industry as simply a group of profiteers, willing and able to manipulate the oil market at the expense of U.S. taxpayers is nothing new, and this bill is timed at a point when the public is not likely to argue against it. The simple economic concept that when corporate expenses increase, so do consumer prices, may be a hard sell for the oil companies. Even pointing out that oil companies are already income tax at a rate close to 32% may do little for their case in the eyes of the American public.
The announcement of this bill was made on May 10. Today, six days later, President Obama announced that he is interested in expanding domestic oil and gas operations - lifting previous prohibitions. House Republicans have already passed measures to do approximately what Obama outlined, but that legislation is destined to face opposition from Democrats in the Senate. Leaders in the oil industry are viewing this move by the president as a direct response to pressure from consumers to "do something" about high fuel costs. A "wait and see" attitude is being held in the oil industry - if the president is deciding he likes the idea of more drilling now because the public is upset about high prices at the pump, it's possible he won't be as interested if oil prices plummet, or there's another significant oil spill. Senate Democrats may be questioning the president's current stance as well. While it says nothing about their plan to remove the income tax break, it is definitely good news for the oil industry.