Baucus crafts oil tax break repeal plan amid high profit reports

Senate Finance Committee Chairman Max Baucus (D-Mont.) struck while the iron was hot Thursday and vowed to shepherd a plan through the panel that ends billions of dollars in tax breaks for the largest oil companies.

Baucus released a short “blueprint” of the plan – which would expand investment in “clean” fuels and efficient vehicles – the same day that oil giants Exxon and Shell reported big gains in first-quarter profits.

And the outline arrives a day after Senate Majority Leader Harry Reid (D-Nev.) said he planned to bring a tax break repeal measure to the floor. The White House and Democrats are targeting the subsidies in the wider political debate that has erupted over high gasoline prices.

The plan would prevent the five biggest oil companies from claiming a lucrative deduction on domestic manufacturing income, reduce the foreign tax credit for royalty payments to foreign governments and impose an excise tax on certain Gulf of Mexico leases, the blueprint states.

(The blueprint is scant on details, but the excise tax could be a revival of past Democratic efforts to target leases issued in the late 1990s that currently allow royalty-free production even when oil and natural gas prices are high. Past Democratic plans would allow a credit against the proposed excise tax for royalties paid, thereby targeting leases that allow the unlimited royalty holidays.)

According to the short document, the plan would “encourage increased production of cleaner and more affordable domestically-produced fuel by making it easier for manufacturers to produce and for consumers to purchase,” and also bolster incentives for the purchase and manufacture of fuel-efficient vehicles.

His plan would “incentivize the infrastructure needed to support clean energy vehicles, such as alternative energy fueling stations, that will make the clean energy transportation of the future possible,” as well, his office said.

The plan would not add to the deficit because repealing the oil industry tax incentives would pay for the “clean” energy programs in the bill, according to the Senate Finance Committee.

More details will emerge after talks with other committee members, the announcement states.

“High gas and energy prices are hitting folks hard in Montana and across the country,” Baucus said in a statement. “Now is not the time to stand idly by while large oil and gas companies get billions of dollars in tax breaks – now is the time to take concrete steps toward cleaner, more affordable, domestically-produced energy.”