With gas prices north of $4 a gallon across the Golden State, both of California’s Democratic Senators voted for a bill more likely to increase than decrease gas prices. Yesterday, Dianne Feinstein and Barbara “Call Me Ma’am” Boxer voted in favor of a motion to proceed on a bill which would “big oil tax loopholes“. In actuality, all the legislation would do would be to deprive certain oil companies of a benefit Congress granted to all companies in 2004. Christopher Taylor explains:
. . . the tax breaks in question are part of IRS Code Section 199, which allows any business to deduct certain expenses from their tax returns. The maximum allowable deduction is 9% of those expenses, and this is part of the tax code passed in 2004 under the American Jobs Creation Act.
The idea at the time was to make it possible for businesses to take some risks and if those risks didn’t pan out to get a tax break to reduce the pain and cost. This in theory would encourage businesses to expand and hire more.
These tax breaks appy to all businesses, not just oil companies, but the tax code specifically states that oil companies can only get a 6% break, not a 9%.
The Democrats backing the bill are merely grandstanding by bashing the oil companies. They seek to deflect anger over high gas prices directed at the incumbent Administration and onto big oil. Fortunately, the legislation failed, so, it was mostly a feel-good gesture for Senate Democrats, giving them the chance to vent against one of their favorite demons.
Even if the bill had passed, it would have done nothing to lower the price of gas. Indeed, if Congress punishes the companies supplying the product, they’re likely to see their costs increase. And said companies may well have to pass that cost onto consumers. The New York Times reported that even some Democrats
. . . criticized the initiative, saying it was misdirected and would do nothing to ease gasoline prices and could cost American jobs.
“Why are we harming an industry — five large oil and gas companies that work internationally, that employ 9.2 million people in the United States directly?” asked Senator Mary L. Landrieu, Democrat of Louisiana. “Why are we doing it?”
Mary, you’ve been a member of the Democratic caucus long enough. That answer should be easy. It’s all about looking for someone to blame instead of pushing legislation (i.e., for more oil exploration) that would actually address the problem.