Tax Relief Act of 2005

TAX RELIEF ACT OF 2005 -- (Senate - November 17, 2005)

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Mr. REED. I offer this amendment along with Senator Kennedy, Senator Schumer, Senator Kohl, Senator Rockefeller, Senator Kerry, Senator Carper, Senator Leahy, Senator Lieberman, Senator Dayton, and Senator Stabenow.

Mr. President, this amendment is about LIHEAP, the Low Income Heating Assistance Program. Each of us, at this point, is very familiar with the struggle that is taking place today--and if you were outside early this morning, you understand temperatures are falling--that many families are having to heat their homes for this winter. According to EIA's Short-Term Energy Outlook released last week, energy costs for the average family using heating oil are estimated to hit $1,500 this winter, an increase of $325 over last year's heating season. Natural gas prices could hit $1,000, an increase of $300. For a family using propane, prices are projected to hit $1,300, an increase of $230.

Despite these sharp increases in fuel costs, we sadly continue to fund LIHEAP, the one program that can provide sufficient help, at the same level as last year, which in reality means an actual cut in the level of assistance we can provide low-income consumers this winter's heating season.

The responsible thing for Congress to do is to fully fund LIHEAP at the full $5.1 billion authorized in the Energy Policy Act enacted earlier this year. Indeed, we have tried to do that--not once but three times--in the past few weeks. Senator Collins and I, along with some 30 of our colleagues, have offered amendments to the Defense bill, the Transportation-Treasury-HUD bill, and the Labor-HHS bill to fully fund LIHEAP. We have reached across the aisle and across the country to provide more assistance for the LIHEAP program, and in each instance a majority of this body has gone on record to support full funding.

Today, I come to the floor to offer another amendment to fully fund the LIHEAP program. This time I seek to offset that increase with a temporary 1-year windfall profits tax on large oil companies. This tax would be on the excess profits large integrated oil companies have earned as fuel prices reached record heights over the past year.

My amendment draws from Senator Schumer's legislation to define windfall profits. My amendment creates a temporary levy on the excess profits of U.S. oil companies and foreign companies that do substantial business in the United States. I would like to thank Senators Dorgan and DODD for proposing the windfall profits tax, and Senator Schumer for his modification to this proposal.

The temporary levy applies to major integrated oil companies which have an average daily world-wide production of crude oil of at least 500,000 barrels for the taxable year. Under our revenue mechanism companies will calculate the average of annual profits for the years 2002 to 2004, subtracting the highest year, and then adding 10 percent. The resulting number is the reasonably inflated average profit for calculating the amount of windfall profits. Any profits earned from U.S. operations in 2005 that exceed this reasonably inflated average profit are deemed a ``windfall profit'' and is taxed at the rate necessary to raise the required $2.92 billion needed to fully fund LIHEAP.

This is a temporary 1-year measure. The tax rate is set simply to fund the authorized level of LIHEAP. In America no family should be forced to choose between heating their home and putting food on the table for their children. No senior citizen should have to decide between buying fuel or buying pharmaceuticals. But, unfortunately, this sadly is the case and this winter it will be the case in too many situations. The heat-or-eat dilemma is not just rhetoric. The RAND Corporation conducted a study and found that low-income households reduced food expenditures by roughly the same amount as increases in fuel expenditures. In some respects this is a tidal wave not of rising water like Katrina but of rising energy prices.

We have all gone out and had the opportunity to visit with constituents and get a firsthand glimpse of the struggle they are faced with. I visited a few weeks ago with Mr. Aram Ohanian, an 88-year-old veteran of the U.S. Army in World War II, living on a $779-a-month Social Security check, and money is so tight that sometimes he has to eat with his children or go to a local soup kitchen, and he also has to get assistance from a food bank. These price increases to Mr. Ohanian will be very difficult. He received assistance last year with respect to LIHEAP funding, but that assistance will be relatively less this year because of rising prices and maybe because the demand will be much more.

Last month, the Social Security Administration announced that cost-of-living adjustments for 2006 on average is about $65. That $65 increase to Mr. Ohanian is not going to take up the slack in terms of these tremendous fuel prices.

Now, this amendment would increase LIHEAP funding by $2.92 billion. In fact, even if we did this, there would still be a significant number of Americans who qualify for the program but will not get help. But at least we are taking a step toward fully authorizing this very important program.

I hope we can, in fact, support this effort. Some have objected not because the LIHEAP program does need money but because there was no offset. Today there is an offset. This windfall profits tax will pay for the additional cost of LIHEAP, and I can't think of anything more appropriate than asking fuel companies, oil companies to take some of their very extraordinary profits and put them back so that poor people can buy their products. I think that is fair. I think it is just. I think it makes a lot of sense.

I asked them voluntarily, sent a letter to all the oil executives saying: Would you pledge 10 percent of your profits to the local community agencies that provide support? I have heard but from one company, CITGO, who talked about their plan to give bulk fuel. Everyone else has said nothing. They are going on as if American families are not in desperate situations because of the price of heating oil.

Mr. President, I hope my colleagues, in fact, are able to support this method which fully pays for the increase to LIHEAP which so many of us agree is absolutely necessary.

I yield back the Senator from Montana any time I have.

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