Senate Democrats Call For End Of 'Unwarranted' Big Oil Tax Breaks

by Leroy Baker, Tax-News.com, New York

01 May 2006

Senate Democrats are calling for the removal of "massive and unwarranted subsidies" to big oil firms from a tax reconciliation bill currently passing through Congress as the furore over record-breaking oil company profits and massive executive pay awards continues.

In a letter sent to Charles Grassley, the Republican chairman of the Senate Finance Committee last week, the four Democratic Senators, including Senate Democratic Leader Harry Reid, Assistant Democratic Leader Dick Durbin, Senator Debbie Stabenow, and Senator Chuck Schumer urged the inclusion in the conference agreement on the tax reconciliation bill of provisions that eliminate "unnecessary and unwarranted tax breaks for the oil and gas industry."

"On the very day President Bush and congressional Republicans made statements indicating they are going to take a tough line against oil companies recording record profits and paying huge salaries, news reports indicate congressional Republicans have decided to jettison these provisions. As Chairman of the Conference, we urge you to be true to these public statements and include these offsets in the final bill," the Senators wrote.

The letter continues:

"Consumers are paying more than $3.00 per gallon of gasoline, a 100% increase since 2001; there are rumored to be gasoline shortages in some areas on the East Coast due to poor oil company planning; and oil futures prices for June delivery have reached $75 a barrel. Diesel fuel has also more than doubled in price in the same time period, severely hampering the farm economy and the transportation industry.

"At the same time that American consumers are suffering under these high gasoline prices, oil companies are reporting record-breaking profits and their executives are receiving multi-million dollar retirement packages. There is no reason to continue tax policies that provide further tax windfalls to these companies. The three provisions included in the Senate-passed bill would repeal tax breaks for these companies that total $5.4 billion over the next ten years.

"We urge you to stand firm in support of the Senate-passed bill. That bill rightly recognized as unconscionable the continuation of billions of dollars in tax breaks for an industry that is recognizing record-breaking profits at the expense of American consumers."

Grassley himself has expressed dismay at the activities of the oil companies and their executives at a time when American families and businesses are struggling to absorb escalating fuel prices.

In a letter sent to IRS Commissioner Mark Everson, Grassley and ranking Democrat on the finance committee Max Baucus requested to inspect the annual federal corporate income tax returns for the last five years of the largest 15 oil and gas companies, based on sales.

"We’re seeing record profits and significant executive compensation in the oil and gas industry,” observed Grassley.

I want to make sure the oil companies aren’t taking a speed pass by the tax man," he added.

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