Tax Break Repeal
Floor Speech
Mr. SANDERS. Mr. President, I have a pending amendment to the tax extenders bill and want to say a few words on that.
At a time when we have a recordbreaking $13 trillion national debt and an unsustainable Federal deficit, at a time when two out of every three corporations in America paid no Federal income taxes between 1998 and 2005, at a time when ExxonMobil, the most profitable corporation in the history of the world, not only paid no Federal income taxes in 2009 but actually got a $156 million refund from the IRS, at a time when we desperately need to end our dependence on fossil fuel and transform our energy system, the amendment I am offering, along with Senator Wyden, Senator Whitehouse, Senator Menendez, and Senator Lautenberg, is simple and straightforward.
This amendment simply repeals over $35 billion in tax breaks to the oil and gas industry, all of which were recommended for elimination in President Obama's fiscal year 2011 budget, which the Joint Committee on Taxation has estimated would raise over $35 billion in a 10-year period.
To put this in perspective, the taxpayer dollars saved by repealing these tax breaks represents about 1 percent of the total projected revenue of the oil and gas industry over this same time period. In other words, the cost of repealing these tax breaks for the oil and gas industry is negligible.
More than $25 billion of the money saved under this amendment would be used to reduce the deficit. I hear my friends coming down every day, appropriately, talking about our recordbreaking deficit and our huge national debt. Mr. President, $25 billion in this amendment is used for deficit reduction.
Mr. President, $10 billion would be invested in the highly successful Energy Efficiency and Conservation Block Grant Program over a 5-year period, which would go to 50 States in this country to help them move forward in terms of energy efficiency and sustainable energy.
This amendment has widespread support throughout this country from organizations representing millions of Americans, including the League of Conservation Voters, the Sierra Club, the American Council for an Energy Efficient Economy, Friends of the Earth, the Union of Concerned Scientists, Physicians for Social Responsibility, the American Public Health Association, moveon.org, Environment America, Oceana, 1 Sky, Greenpeace, Public Citizen, the Center for Biological Diversity, the Conservation Law Foundation, and 350.org.
In addition, the Energy Efficiency and Conservation Block Grant funding this amendment would provide is strongly supported by the U.S. Conference of Mayors, the National League of Cities, the National Association of State Energy Officials, and the National Association of Development Organizations, and I am pleased to report that Taxpayers for Common Sense and the National Wildlife Federation strongly support repealing the oil and gas tax breaks this amendment would eliminate.
Let me briefly explain why this amendment needs to be included in this overall legislation. First, there is no debate; everybody here understands we have to address the deficit crisis and the $13 trillion national debt we face. Well, I say to my friends: If you are serious about doing this and doing it in a way that doesn't decimate the middle class or working families, this amendment is a good step forward: $25 billion in deficit reduction over a 10-year period is significant and it would help us address a major crisis.
Secondly, we all understand--or I hope we all understand--we have to reform the Tax Code, which is grossly unfair today. We must make the Tax Code fairer and more equitable for ordinary Americans and, in my view, that means ending the absurdity of seeing large corporations, enormously profitable corporations, not pay their fair share of taxes and, in some cases, not paying any taxes at all. Each and every year, large and profitable corporations all over this country are able to avoid paying billions of dollars in Federal income taxes through loopholes in the Tax Code and generous tax breaks. This is simply unacceptable, it is unfair especially with a record-breaking deficit, it is very poor public policy, and it has to be changed.
To highlight how absurd this situation has become, take a look at the August 2008 report on the subject by the Government Accountability Office or the GAO. According to this report--and I hope Americans hear this--two out of every three corporations in the United States paid no Federal income taxes from 1998 to 2005--two out of three. Amazingly these corporations had a combined $2.5 trillion in sales but paid no income taxes to the IRS. This statistic includes one out of four large corporations. That is according to the GAO.
Further, according to a report from the Citizens for Tax Justice, 82 Fortune 500 companies in America paid:
zero or less in federal income taxes in at least one year from 2001 to 2003.
I am thinking now about working people in the State of Vermont and in the State of New Mexico or in Oklahoma, where people are making 10, 12 bucks an hour; people are working 40, 50, 60 hours a week; people who are paying their fair share of taxes. Yet we end up having these large multinational corporations making billions of dollars every year in profits and then they avoid paying their fair share of taxes. That is an issue we have to address.
This same report from Citizens for Tax Justice states:
In the years they paid no income tax, these companies earned $102 billion in U.S. profits.
How is that? Not a bad deal: $102 billion in profits, zero income taxes.
But instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury, totaling $12.6 billion.
How is that? They make huge amounts of money, don't pay any taxes, and then Uncle Sam gives them a rebate. That is quite the scam.
In other words, between 2001 and 2003, 82 of the largest, most profitable corporations in this country received a $12.6 billion tax refund--tax refund--from the IRS when, if they were paying their 35 percent of corporate taxes as the law requires, they would have paid over $35 billion in taxes. That is a net loss to the U.S. Treasury of $48 billion.
It is not just Bernie Sanders who has strong concerns about this issue. The issue of abusive corporate tax breaks has even gotten the attention of Forbes Magazine.
Mr. INHOFE. Mr. President, will the Senator yield?
Mr. SANDERS. I will yield in a few minutes and be happy to discuss this issue with my friend.
Mr. INHOFE. Just one short question. Is the Senator talking about amendment No. 4318?
Mr. SANDERS. I am, but not yet. I will get to that in a moment.
Mr. INHOFE. OK.
Mr. SANDERS. Mr. President, the issue of abusive corporate tax breaks has even gotten the attention of Forbes Magazine, which reported on April 1, 2010--this is Forbes Magazine--Forbes 500, dynamic capitalism, Forbes Magazine, and this is what they say on April 1, 2010:
As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.
Forbes Magazine. This is not one of the more progressive journals in America.
So enough is enough. We can and must reduce the deficit in a way that does not harm the American middle class. Making sure that large and profitable corporations are not able to avoid paying taxes could significantly reduce the deficit. It is not the only thing we have to do, but it would be an important step forward.
As a first step in this direction, the amendment I am proposing today goes after the three most generous tax breaks enjoyed by the oil and gas industry and would raise over $35 billion in revenue over a 10-year period--$35 billion, 10 years. All of these tax breaks were recommended for elimination in President Obama's fiscal year 2011 budget request.
Specifically, this amendment eliminates the expensing of intangible drilling costs to raise over $10.9 billion. It eliminates percentage depletion for oil and gas while saving over $9.6 billion; and it eliminates the so-called manufacturing tax deduction for oil and gas production, saving over $14.7 billion over the next decade, according to the Joint Committee on Taxation.
I want my colleagues to take a look at this chart, because what this chart tells us is that during the last 10 years, the five largest oil companies--ExxonMobil, Shell, BP, Chevron, Texaco, and ConocoPhillips--earned over $750 billion in profits--10-year period, $750 billion, the top five oil companies. During the first quarter of this year, big oil's profits increased by 85 percent. Providing tax breaks to this profitable industry at a time of record-breaking deficits simply does not make sense. We can't afford to do it.
Let me give one example of the absurdity of continuing to provide tax breaks to the oil and gas industry. I want my colleagues to take a look at this chart right here. As we all know, ExxonMobil was the most profitable corporation in the history of the world from 2006 through 2008, making $40 billion in profits in 2006, $41 billion in 2007, and $45 billion in 2008. Not bad. These profits, among other things, enabled Exxon to provide a $398 million retirement package to its former CEO, Lee Raymond.
In 2009, one of the most economically difficult years since the Great Depression--millions of people losing their jobs, their homes, their savings--ExxonMobil was still able to make $19 billion in profits in the midst of a severe recession.
I have a question for my friends on both sides of the aisle to consider: Out of that $19 billion profit, how much did ExxonMobil pay in taxes to the IRS? How much did they pay? How many billions of dollars? How many hundreds of millions of dollars did they pay? Well, the answer is: Zero, not one red nickel.
So all over America, working families are struggling to keep their heads above water. They pay their taxes. Yet we have a corporation, the most profitable in the history of the country, that last year made $19 billion in profit, and they didn't pay a nickel in taxes.
But that is not, as they say, the whole story. It gets worse than that.
As this chart right here on my right shows, ExxonMobil reported to the SEC that not only did it avoid paying any Federal income taxes, it actually received a $156 million refund from the IRS. Twenty-two percent of the children in this country live in poverty. We have record-breaking deficits. We have a $13 trillion national debt, and ExxonMobil receives $156 million in a tax refund after making $19 billion in profits. This has to stop.
This amendment I am offering would begin to make sure that ExxonMobil pays at least a minimal amount of their record-breaking profits in taxes to the Federal Government. That is the very least we can do.
But ExxonMobil is not the only corporation enjoying these tax breaks. Chevron, the fourth most profitable oil company in America, a company that made a $10 billion profit last year when other companies were fighting to stay alive, reported to the SEC that it received a $19 million refund from the IRS. This is Chevron. I know. It is not as much as ExxonMobil, but a $19 million refund after you make $10 billion in profits, that is not too shabby.
Valero Energy, the 25th largest company in America with $68 billion in sales last year, received a $157 million refund check from the IRS, and over the past 3 years it received a $134 million tax break from the oil and gas manufacturing tax deduction that this amendment seeks to eliminate. And on and on it goes. ConocoPhillips, et cetera, et cetera.
Let me very briefly turn to what this amendment would do with the revenues. In terms of deficit reduction, as I have indicated, the benefits are substantial. As we all know, the underlying bill we are debating today, which I support, would increase the deficit by about $87 billion over 10 years. This amendment, my amendment, would cut that by about a third--$25 billion over 10 years. This amendment importantly would also invest $10 billion into the Energy Efficiency and Conservation Block Grant Program which, as I mentioned earlier, will create jobs, save people money on their fuel bills, and help transform our energy system away from fossil fuels.
I get a little bit tired of hearing my friends come to the floor of the Senate talking about the need to reduce our deficit. I get a little bit tired of people talking about the need for equity. If we cannot address a situation where some of the most profitable corporations in America pay zero Federal taxes and, in fact, get a tax rebate, then I am not quite sure what this institution is doing.
So we now have an opportunity to move forward, to address our deficit crisis. We have an opportunity to move forward to transform our energy system. We have an opportunity in this amendment to create jobs and break our dependency on fossil fuel.
I ask unanimous consent that the Senate now proceed to a debate on amendment No. 4318; that the time for such debate be limited to half an hour equally divided; that once the time has expired on this debate, the Senate proceed to a vote on amendment No. 4318.
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