June 24, 2024

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Democrats propose tax on profits of major oil companies

Democrats propose tax on profits of major oil companies

Congressional Democrats are proposing to tax major US oil producers and importers and direct the collected money to Americans, an effort they said would limit profiteering in the United States. Era of high gas prices.

A new law from Senator Sheldon Whitehouse (DE, RI) and Representative Ro Khanna (DE, CA) that would place a 50% tax, levied per barrel, on the price difference between the current cost of a barrel of oil and the average cost of a barrel between 2015 and 2019. It is expected to raise an estimated $45 billion annually at $120 a barrel of oil, according to the lawmakers behind the proposal.

Under this price scenario, the divided revenue for taxpayer deductions would amount to an annual payment of $240 for a single presenter earning less than $75,000 and $360 for subscribers earning less than $150,000, proponents said.

Khanna, who introduced the proposal on Friday after announcing it with colleagues earlier this week, said the proposal would spur energy companies to set prices, which were already on the rise before Russia invaded Ukraine and further constrain global supplies.

“as Russia’s invasion of Ukraine It drives up gas prices, and fossil fuel companies are making record profits. “These companies have made billions and used the profits to enrich their shareholders while ordinary Americans are getting hurt at the pump.”

Several of the largest oil producers in the United States are reporting billions in losses in 2020 after the pandemic caused demand for oil and gas. Corporate profits rebounded largely in 2021 after they made deep cuts to their businesses and oil prices rose in the wake of rising demand for fossil fuels.

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Oil prices have been relatively low over the past five years and the impact on profitability has varied by company. Gross profit margin for Exxon Mobil Corp., the largest US oil company, has remained steady between roughly 34% and 31% over the past five years, according to S&P Capital IQ. Chevron’s competition generated gross margins of about 49% in 2015 and 2016, after lower oil prices, and its margins dropped to around 41% when prices rebounded in 2018.

The proposal, called the Big Oil windfall tax, has the support of nearly a dozen Democratic senators and two House Democrats, Rep. Barbara Lee (D., CA) and Nanette Barragan (D., CA). None of the Republicans signed the motion.

Smaller energy companies will be exempt from the proposed tax.

The American Petroleum Institute, the oil and gas industry’s largest lobbying group, has criticized the proposal, saying lawmakers should look at policies that increase supply in the country rather than policies that discourage investment.

“The American people are looking for solutions, not finger-pointing,” said Frank Macchiarola, the group’s senior vice president for politics, economics and regulatory affairs.

While the proposal has the potential to increase energy prices because production will become less profitable and imports will become more expensive, it is possible that families would be better off, said Thornton Matheson of the Urban Institute, a senior fellow at a nonpartisan think tank in Washington. With annual payments.

Previous gas price increases have prompted Congress to consider windfall profits tax, a tax on company profits in amounts above a predetermined standard. In 1980, federal lawmakers put one in place for eight years, and rescinded it when prices fell.

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In 2008, Democratic lawmakers considered imposing a windfall profit tax on oil companies to pay for alternative energy projects as gas hit $4 a gallon. On the presidential campaign trail, then sen. Barack Obama Support such a taxWhile Senator John McCain opposed it. But the oil industry said the proposals It won’t lower gas pricesLegislation is dead.

Christopher M. Matthews contributed to this article.