The committee heard testimony from top executives of America's five biggest oil companies. They'd been invited to give their views on Senate Bill 940, titled “A bill to reduce the Federal budget deficit by closing big oil tax loopholes, and for other purposes.”
The bill would eliminate some “tax expenditures” — income that could be taxed but isn't — enjoyed by the five big firms. Sponsors say it would add $21 billion in federal revenue over 10 years and reduce overall profits at the five firms by a mere 3 percent.
Not surprisingly, the oil executives think the bill is a bad idea and that “loopholes” is an incorrect description of what they regard as vital tax incentives. In a press release Wednesday, ConocoPhillips chief executive officer Jim Mulva went so far as to call the bill “un-American.”
Un-American, probably not. Un-serious, definitely. S. 940 was introduced just three days ago by Democratic Sen. Robert Menendez of New Jersey. His co-sponsors include Democrats Claire McCaskill of Missouri and Sherrod Brown of Ohio.
S. 940 got a second reading on Wednesday and immediately was placed on the Senate calendar for debate next week. No kicking around committees for years at a time for this baby.
It may get debated, but Senate Republicans will see that it doesn't come to a vote. On Thursday, Sen. Orrin Hatch of Utah, ranking member of the Finance Committee, sometimes was the only Republican in the hearing room. He called the bill a “tax increase” and said it would set a “bad precedent.”
Democrats know that S. 940 is going nowhere. Their purpose is simply to put Republicans on the side of the oil companies at a time when gasoline prices are high. Sens. Menendez, McCaskill and Brown are among Democrats facing re-election next year.
This is not to say that eliminating oil company tax breaks is a bad idea. Indeed, by some estimates, if all nine of the tax expenditure programs for all oil companies were removed, it could save as much as $45 billion over 10 years. Big money, and the Big 5 surely could afford it. But it wouldn't put much of a dent in a $14 trillion national debt.
The concept isn't new. Sen. Ron Wyden, D-Ore., played a video at Thursday's hearings of a 2005 committee hearing at which oil executives said that with oil selling at $55 a barrel, they didn't need the tax breaks. Light sweet crude was trading at about $98 on Thursday.
But now the executives say they just want to be treated “fairly.” If they have to give up their tax breaks, others should have to give theirs up, too.
That's what it will take if the deficit is to be brought down to sustainable levels. The Treasury gives up $1.1 trillion a year in tax expenditures. The deficit problem won't be cured without eliminating, or at least capping, all of them. Serious solutions won't be reached by playing games.
©2011, St. Louis Post-Dispatch.
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