US Senate rejects bill aimed at five majors' tax deductions
The US Senate refused to invoke cloture and effectively killed S. 940, Robert Menendez’s (D-NJ) bill that would have denied the five largest US oil companies use of the foreign tax credit’s dual capacity provision, the US manufacturers’ tax deduction, the intangible drilling cost deduction, the percentage depletion allowance, and the tertiary injectant expense deduction.
OGJ Washington Editor
WASHINGTON, DC, May 18 -- The US Senate refused to invoke cloture and effectively killed S. 940, Robert Menendez’s (D-NJ) bill that would have denied the five largest US oil companies use of the foreign tax credit’s dual capacity provision, the US manufacturers’ tax deduction, the intangible drilling cost deduction, the percentage depletion allowance, and the tertiary injectant expense deduction.
The Senate voted 48 to 52 on May 17 to move the bill forward. The measure also would have eliminated suspension of royalties from deepwater production on the US Outer Continental Shelf and deep natural gas production, and would have dedicated any revenue the measure produced, once it was enacted, to reducing the federal deficit.
Senate Majority Leader Harry M. Reid (D-Nev.) said the defeat reflected Republicans’ priorities. “They would rather cut college scholarships, slash cancer research, and end Medicare than take away taxpayer-funded giveaways to oil companies that are raking in billions of dollars in profits,” he declared following the vote. “That tells you everything you need to know.”
But three Senate Democrats—Alaska’s Mark Begich, Louisiana’s Mary L. Landrieu, and Nebraska’s Ben Nelson—broke ranks and voted against the bill. “I didn’t support the Democratic proposal this evening, and I won’t be supporting the Republican proposal tomorrow because this isn’t about partisan politics for me. It’s about Alaska and our nation’s long-term energy security,” Begich said following the measure’s defeat.
Minority Leader Mitch McConnell (R-Ky.) said legislation that passed the US House last week and is scheduled to come to a vote in the Senate on May 18 is a better alternative. “If President Obama and his party are really serious about lowering [gasoline] prices, making us less dependent on foreign oil, and creating the thousands of jobs that American exploration is proven to produce, they would embrace our plan and stop pretending to care about a crisis they have done so much to create and, their latest public relations efforts notwithstanding, continue to ignore,” he said.
‘Focused on excuses’
“This administration has consistently pushed policies that actually make the pain at the pump worse,” said Sen. John A. Barrasso (R-Wyo.), a member of the Energy and Natural Resources Committee. “Instead of supporting ‘all of the above’ energy production across our country, they’ve been more focused on excuses about why we shouldn’t use American energy.”
Oil and gas trade associations welcomed the Menendez bill’s defeat. “With this vote, we hope Congress will now turn to more constructive policymaking on energy,” said American Petroleum Institute Executive Vice-Pres. Marty Durbin. “Our nation needs to prepare for its energy future with policies that encourage more development of domestic oil and gas resources that we know our nation will need in the decades ahead.”
Durbin said raising taxes on an industry that already contributes more than $86 million/day in federal taxes and production fees would take the nation in the wrong direction and result in fewer jobs, diminished energy security, and less revenue for the government. “Instead, we hope the Senate will move forward tomorrow with S. 953 to move the debate forward on domestic energy production,” Durbin said.
Other business groups also cheered S. 940’s rejection. “Raising taxes on oil companies would end up ultimately hitting consumers’ wallets, and the Senate was right to reject this bill,” said Bruce Josten, executive vice-president for government affairs at the US Chamber of Commerce. “Levying punitive new taxes and fees on America’s oil and gas industry would increase US dependence on foreign oil, increase costs to consumers, jeopardize US jobs, and erode economic competitiveness.
“Instead of targeting specific industries to offset or pay for its inability to affect sound fiscal policy, Congress should be focusing on solutions that will lead to a more secure energy future,” he maintained. “This includes increasing domestic energy production.”
Contact Nick Snow at email@example.com.