Close Big Oil Tax Loopholes Act

CLOSE BIG OIL TAX LOOPHOLES ACT

Mr. BROWN of Ohio. Mr. President, I thank the senior Senator from New York who has been a real leader on this issue to bring more tax fairness to the American people and take away the subsidies of these five companies that absolutely do not need those subsidies and to help deal with the budget deficit. We can do that with one simple step that far too many conservative politicians in this city are resisting. I join Senator Schumer in expanding on his comments.

We think our Nation's spending and its budget should reflect our Nation's priorities, should reflect our investments in education, infrastructure, how it will strengthen our economic competitiveness, whether in Charleston, WV, or Ironton, OH, through the innovation of entrepreneurs and small businesses.

Our Tax Code should also reflect our priorities to create jobs at home--to encourage companies to invest in clean energy to end our Nation's dependence on foreign dirty oil.

Last week, unfortunately, we heard just how out of touch some politicians and their benefactors in the oil industry are with the real priorities and real problems facing our Nation--huge Federal deficits, $4-a-gallon gas, Americans struggling to find a job or put food on the table even if they are employed.

I received a letter from Laurie from Lakewood, OH:

This recession has hurt our family budget for the past three years. My husband and I have had our pay reduced.

We cut our expenses--not going out to eat or to the movies or the department stores. My husband and I are both working second jobs to keep our kids in school and food on the table. We carpool and do everything we can to cut expenses.

I'm at the end, I don't know where else to cut and I don't have the option of not putting gas in my tank because I have to get to my jobs.

She said ``jobs,'' plural.

Please, if you can do anything, it would help so many of us who are struggling.

Laurie's story is similar to that of many other Americans and so many Ohioans from Ashton, OH, to Hamilton, from Lima to Gallipolis, the working mom who drives from home in the suburbs to work downtown; truckdrivers in Toledo where high gas prices jeopardize their ability to operate and transport products across the country;

small business owners in Lima, in Zanesville, Findlay, Mansfield, and Chillicothe who worry that high gas prices cut into already razor-thin margins, where money spent on gas means less spent on finished products, goods, and services.

Their stories stand in sharp contrast to what we heard last week when the CEOs of the five largest oil companies testified before the Senate Finance Committee. They insisted on holding on to those tax loopholes that they said before they do not want and they have acknowledged they will not use to expand production.

A common refrain we hear from conservative Washington politicians is that just as American families are tightening their belts, so, too, should the Federal Government. Just ask Laurie and the thousands of other Ohioans who work hard and play by the rules and are doing everything they can to

get by.

What about big oil? They are doing just fine with windfall profits, billions and billions. The five largest oil companies made $32 billion in profits in the first quarter of this year. Based on that, over four quarters over this full calendar year of 2011, we can project the five companies' profits being $128 billion plus--$128 billion. Their profits are good. But when their profits are more than $30 billion in the first quarter alone, it is clear they do not need these taxpayer-funded giveaways.

Americans spent 28 percent more for gas in the first 3 months of 2011 than they did in the same period in 2010. Meanwhile, the big five oil companies--BP, Chevron, ConocoPhillips, ExxonMobil, and Shell--made 38 percent more profit. The companies then used a major portion of these additional profits to buy back stock to enrich their board of directors, senior managers, and shareholders.

These massive profits are possible by a misguided part of the Tax Code--one that allows them to take advantage of credits that are, in fact, meant to encourage American manufacturing. That is why the Close Big Oil Tax Loopholes Act is so important. The bill would end more than $2 billion in tax subsidy deductions and royalty relief that big companies receive each year.

Consumers who are already paying for $4-a-gallon gas at the pump should not be forced to write another $2 billion check to companies that do not need it. But that is exactly what our Tax Code allows. To put it another way, it grants corporate welfare to Big Oil. It is unnecessary and undermines the actual manufacturing that can create jobs and strengthen our production of domestic clean energy.

We should promote only those tax credits--only precisely those tax credits--that constitute an effective use of tax dollars. For example, manufacturers from across Ohio and the Nation have benefited from the 48(c) advanced manufacturing tax credits that help us move away from our dependence on foreign oil.

Mr. President, 48(c) leverages public incentives to attract private sector investment. That means government and business working together to create jobs and build a clean energy economy. Seven Ohio companies were awarded $125 million in initial 48(c) funding in the first phase of last year. These companies and their workers--in Bedford, Bucyrus, Circleville, Dayton, Findlay, Perrysburg, and Toledo, OH--will retool their factories to build clean energy products from wind turbine bolts to energy-efficient lamps and home appliances to state-of-the-art solar panel technologies.

I introduced the Security in Energy and Manufacturing Act--the SEAM Act--to extend the 48(c) program. The SEAM Act will promote grants as a means to invest in more companies, especially small- and medium-sized manufacturers that do not have tax liabilities or companies that struggle to find credit in the tight financial market.

We want these manufacturing tax credits--very different from what the oil industry is demanding they keep because their tax incentives accomplish none of this. We are asking that those startup companies, those companies that are not yet so profitable, take these 48(c) tax credits because they simply do not have the tax liability yet. We are asking that those be part of the code so those companies can get some assistance as they begin to grow their businesses and conserve energy.

This would further promote U.S. clean energy manufacturing and ensure our manufacturers produce all the component parts in the clean energy supply chain.

Yet instead of adopting this valuable incentive, Republican opposition in the Senate and Republican opposition in the House forces us to continue to allow Big Oil to exploit the manufacturing deduction to extract oil from the ground. They do not need any more incentives to drill for oil when they are getting close to $100 a barrel. What they are doing is not manufacturing in any sense of the word.

We need a more comprehensive reexamination of the corporate Tax Code. In the meantime, we should be able to agree there is no justification to continuing tax subsidies to companies that have no need for them. This legislation is modest. It is only in the scheme of a huge Federal budget, in the scheme of $125 billion profits for the oil companies. It is only in the scheme of that a first step. After removing these unnecessary tax loopholes, the Senate should work on cracking down on both reckless Wall Street speculators and OPEC members that manipulate prices through collusion and price fixing.

One step is to take away the tax subsidies. Middle-class families in Dayton, Akron, Canton, Youngstown, Huntington, Charleston, in Beckley are reaching into their pockets and giving to the oil companies. We are taking that away. At the same time, the administration needs to crack down on Wall Street speculators that are gaming the system as they manipulate prices with OPEC nations through collusion and price fixing.

By taking these necessary steps, we show how our spending and our Tax Code and our budget can reflect not only our priorities but how we can actually meet them.

The time to ask is now. I ask my more conservative colleagues here to join us. It is a pretty easy step to move toward a better fiscal situation, a more coherent budget policy--that we eliminate these tax subsidies that have gone to America's five largest oil companies, some of the most profitable companies, frankly, in the history of the world.

Mr. President, I yield the floor.

Source