As gas prices climb at the pump and oil companies earn record profits, President Obama again calls for an end to oil subsidies and Congressman Dennis Kucinich (D-OH) wants to reduce gas prices through a windfall profits tax on oil companies.
Kucinich is re-introducing his Gas Price Spike Act, which would tax windfall profits on oil companies, give tax credits for the purchase of ultra efficient vehicles, and provide federal grants to reduce mass transit fares.
"Consumers are being gouged at the gas pump," stated Kucinich. "The only thing rising faster than the price of gasoline right now is the skyrocketing profits of the oil companies."
As of April 25, 2011, the national average gas price was $3.88, according to the Energy Information Administration, while oil company profits for the first quarter of 2011 are expected to increase by as much as 50% over last year.
"Washington can no longer ignore this issue," continued Kucinich. "High gas prices are eating away at consumers’ income and could threaten any real economic recovery that might be on the horizon."
Kucinich’s bill would:
- Institute a windfall profit tax on gasoline and diesel. Such a tax is to be imposed on all industry profits that are above a reasonable profit level. This proposal would not increase the cost of gasoline because this proposal does not tax the price of gasoline. It only taxes excessive profits of refineries and distributors. Any attempt to increase prices to recover the lost revenue in taxes is simply taxed at 100% making the price increase worthless.
- Transfer the revenue from the windfall profits tax to Americans who would buy ultra efficient cars, made in America, with a tax credit. These will be made directly available to purchasers of cars that get over 65 miles per gallon (electric vehicles).
- Establish a broad based, far reaching program to promote mass rail transit inter- an intra- city. The bill makes funding available to regional transit authorities to offset significantly reduced mass transit fares during times of gas price spikes.
Obama Tries Again to Target Oil Subsidies
Just last month, congressional Republicans defeated a Democratic effort to end subsidies to oil companies, especially in light of the GOP’s focus on reducing the deficit.
Then President Obama heard House Speaker John Boehner (R-OH) tell ABC News that’s he’s open to ending taxpayer subsidies, so he sent a letter to Boehner and other congressional leaders, arguing it’s time to end oil industry incentives. The savings would be applied to the reduce the deficit and the nation’s dependence on foreign oil.
"Our political system has for too long avoided and ignored this important step," said Obama, "and I hope we can come together in a bipartisan manner to get it done."
Boehner’s office immediately rejected the idea because it would count as "raising taxes" on companies. Republicans argue they are necessary to keep the energy industry competitive and encourage domestic oil exploration.
The conversation comes at a time when Republicans are demanding draconian spending cuts, with some suggesting they may not vote to raise the federal government’s debt limit in mid-May unless the administration agrees to significant reductions. If Congress fails to raise that ceiling when the country reaches it, the U.S. would default on its debts within a few months.
White House Press Secretary Jay Carney noted that oil companies are showing huge profits, making it "simply crazy and unsustainable" to keep giving the industry billions of dollars worth of tax incentives.
"While we certainly are glad to see companies making a profit, we do not believe that given the size of those profits – record profits, in some cases – that they need to be subsidized by the American taxpayer," he said. "Especially in these times of constrained budgets and especially when we need to use some of those dollars to invest in clean energy technology, so that we can build the industries of the future, reduce our dependence on foreign oil and create jobs in America."
A large majority of Americans support removing oil company tax breaks, a former major oil company CEO agrees, as do groups such as Taxpayers for Common Sense, which focus on eliminating wasteful government spending.
Senate Majority Leader Harry Reid (D-NV) plans to hold a floor vote to repeal oil and gas tax incentives.
Read more information about high gas prices and why more drilling won’t make any difference:
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C’mon it’s been too long overdue. These oil companies hve been bleeding the American people far too long. High prices at the pump,huge profit gains quarter after quarter. Yeah I think it’s time to end subsidies for BIG OIL!!!!!!
Big Oil subsidies or NASA space exploration or even deep sea exploration. It’s a no brainer. Look @ the return for each dollar spent. Let’s cut the pork.
I don’t see how the presidents and ceos of these big oil companines can even sleep at night with how much they are gouging the public while bringing in record profits, and to add insult to injury these same oil companies use the tax payers money just to turn around and goudge the same tax payers at the pump!