Democrats take aim at oil sector tax breaks
Washington, 13 November (Argus) — Democratic lawmakers are making a long-shot attempt to scrap oil and gas sector tax breaks as the US Senate starts to debate a tax overhaul bill that would leave those deductions mostly intact.
Democrats are seeking to eliminate deductions worth more than $2bn/yr to the oil and gas industry through amendments to legislation that the Senate Finance Committee will start debating today. Those savings would pay for a "refund check" for middle-class families, an extension of a credit for railroad maintenance, or other programs.
Senate Republicans unveiled their tax bill on 9 November and intend to pass it out of committee this week. Democrats have little ability to force changes to the bill but intend to use amendments to help frame it as an unnecessary giveaway to corporations. The measure's main feature is to lower corporate taxes, but it also retains certain deductions that already lower the tax burden to less than the top line 35pc rate for some companies.
The oil and gas industry, for example, can immediately write off "intangible" costs of drilling and production activities through a tax deduction worth an estimated $11bn over the next decade. The industry has lobbied to retain that and other deductions, which they say are needed to spur companies to invest in new projects.
Senate Republicans would retain those deductions in their tax bill and provide new ones, while cutting corporate rates to 20pc from 35pc in 2019.
But Democrats have long pushed against tax deductions for the oil and gas sector, and are trying to use amendments to force their colleagues to choose between keeping those deductions or providing benefits to other constituencies.
Senators Bob Menendez (D-New Jersey) and Debbie Stabenow (D-Michigan) co-sponsored an amendment that would block integrated oil companies from receiving widely used tax breaks. It would use the estimated $2.2bn/yr in savings to give middle-class families a "refund check" to cover energy costs.
The House and Senate bills would repeal taxes on foreign refining income through a policy worth $3.9bn over the next decade. Senator Maria Cantwell (D-Washington) proposed reinstating those taxes in an amendment. Stabenow sponsored a separate amendment to use the savings to make permanent the "45G tax credit" used to support maintenance of short-line railroads.
The Senate Finance Committee, which is chaired by senator Orrin Hatch (R-Utah), has received 373 pages of amendments from Democrats and Republicans. But not every amendment will be considered or come up for a vote.
The committee's mark-up of the bill comes as the US House of Representatives tries to vote this week to approve its own tax bill, which also retains most oil industry tax breaks. Senate majority leader Mitch McConnell (R-Kentucky) said the upper chamber will take up its bill in two weeks, as Republicans try to enact a final tax bill before 25 December.