Imposing a Minimum Effective Tax Rate for High-Income Taxpayers-- Motion to Proceed

Floor Speech

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Ms. MURKOWSKI. Madam President, we continue the discussion about the impact of high energy prices, high gasoline prices at the pump, what they mean to families from Alaska to New York--the very reality we face as a nation that is struggling still, coming out of a recession. We are worried about jobs. We are clearly worried about the high price of energy and what can be done. I think it is important to note this is something to which there are no clear and easy answers. There are no short-term, quick, flip-the-switch fixes we can do. But there are a lot of things we can help to make happen by either affirmative action or, in many cases, getting the government out of the way.

In doing so, I think it is important we speak honestly about the situation before us, about what the potential solutions are and how they translate. In the past day or so, I have heard some comments from some of my colleagues that I think deserve a fair and honest rebuttal so this conversation, the dialog, can continue and be better understood in terms of what we are talking about with these oil and gas tax increases--because that is exactly what the Menendez proposal would do. It would increase the taxes on an industry that is providing not only much needed resources for this country but much needed jobs.

The first point I have heard is that American taxpayers are, somehow or other, subsidizing the oil companies. Again, it is important to put this in context. This argument I think rather bizarrely labels basic tax deductions, somehow or other, as a subsidy, as though the Federal Government allowing businesses to retain more of their earned dollars--because that is what is happening with the situation of the oil companies; they have earned the dollars and they are basically keeping more of the dollars they have earned--that, somehow or other, that action is the equivalent to handing them a check from the government; whether it is what we see, for instance, with the situation at Solyndra, where they got a check from the government. It is important to put in context that when some say we need to end subsidies for oil companies, I think what that translates into is raising taxes on oil production.

I think it important to note and understand this is an industry that does pay substantial taxes to the Treasury. Their taxes are already higher than we see in most other industries.

The four largest companies have an effective tax rate that is over 40 percent. In 2010, they paid $55 billion in income taxes to Federal, State, local, and foreign governments. That is a huge sum. It probably increased, along with the oil prices, back in 2011. These numbers are from 2010. But when people say we all need to pay our fair share, I think it is important to ask the question: How much does the industry have to pay before it is sufficiently considered to be doing its part?

One of the other points of contention that has been raised by my colleagues on the other side of the aisle is that raising taxes on oil companies will not increase gas prices. Well, it is certainly not going to lower them. I think we can probably agree on that.

If we raise taxes on oil production, we are going to get less oil production, and it is a question that I think we need to ask. Think of any situation where if we tax it more, we will have more of it, and it will be more affordable. It just doesn't make sense here.

Both the President and the sponsor of the legislation before us have publicly stated that more production can help lower prices. Loss of oil production due to punitive taxes--I think we have seen this play out time and time again. Back in the Carter administration they advanced a failed windfall profits tax.

I mentioned yesterday on the Senate floor the example that we are seeing play out in Great Britain right now. One year ago the United Kingdom decided to do essentially what is being proposed here. They reacted to high oil prices by raising taxes on the industry, and the net result was companies produced less, and they diverted their investment elsewhere.

In the year since the UK imposed its tax hikes, the production decline has tripled from 6 percent to 18 percent. They are now looking at reversing that decision and have announced new oil tax breaks to try to bring back that production.

Another point that has been raised is that somehow or other oil companies are getting special treatment, and I just mentioned this a little bit. Again, the four largest oil companies have an effective tax rate that is over 40 percent. What that means in terms of where they stack up with other industries--this is a higher effective rate than in most other industries that we would see there.

Another point that has been raised is that oil companies are not investing their profits in more oil production. The President seems to disagree with this statement, arguing that the United States is producing the most oil it has seen in years. But the reality is, efforts to produce oil here in this country have been blocked or slowed by the Federal Government seemingly at every turn. Again, I think it is important to put this in context in terms of where we are seeing increased production because that part of the discussion is true. We are seeing increased production but not necessarily on our Federal lands.

On this map of the lower 48, the Federal lands are all these areas in yellow. The red dots are Federal shale well operations on Federal land. The blue is the shale well private land operations. So we have a situation where 96 percent of all production increases have occurred on our States and on our private lands. This comes from the administration's own EIA that we have seen production on the Federal side drop under this administration. The fact that exists is that America's largest untapped oilfields--whether they are in the offshore areas, the mountain west, Alaska, which is not even on this map--are still off-limits under Federal law. None of these resources are counted when people say the United States only has 2 percent of the world's reserves.

I showed a chart yesterday that indicated we are not even allowed to count these areas that have not been truly proven. It is because of the lands being off-limits or the permitting delays that we see that the United States is not a larger producer of oil. If the Federal Government wanted to, it could allow us to become the world's top oil producer and be virtually independent of OPEC sources.

A fifth point that deserves some comment: Yesterday, the majority leader said for every 1 cent increase per gallon of gas, Big Oil profits rise by $200 million. Presuming this figure is true in the general sense that it has been alleged, I think my Democratic colleague appears to prefer that perhaps those profits should go to OPEC rather than to U.S. companies or to the pension holders. At least in the United States those dollars are taxable. They support jobs--including 9.2 million jobs within the oil and gas industry--and help us with the balance of trade issues. So, again, that is a contention that needs to be directed, some commentary.

Another point is that America is now a major or net exporter of oil. This was raised yesterday by the Senator from California when I was on the Senate floor. She said: We are now a major or net exporter of oil. That statement is absolutely false and needs to be corrected. Under 15 CFR 754.2, it is illegal to export crude oil from the United States without a rare and very special waiver. Therefore, 99 percent of the oil that is produced here stays here. Ninety-nine percent of the oil produced in this country stays in this country. Only 1 percent of U.S. oil is exported.

The very small, very insignificant exports of crude that do occur require a very extensive review process. It is typically sent to Canada or Mexico for refining purposes. Ultimately, that fuel is returned for use in the United States.

In terms of exporting refined products, if that is the concern, Secretary Chu came before the Senate Energy and Water Appropriations Subcommittee and stated that the only refined product exports from the United States consist of certain types of diesel fuel and products we don't use in the United States. So that is a big difference between refined product and crude.

But it is important to correct the record and demonstrate that we are not in a situation where, as a country, we are exporting our crude oil. It is totally inaccurate to say the United States is running a surplus or acting as some major exporter of any of the fuels which Americans need and use to fill up their vehicles or heat their homes. As a result, almost 90 percent of refined products stay in this country. Pretty much the only products that are exported are those products we don't use.

The last and final point I would like to make is about a statement that was, again, made yesterday that somehow or other Republicans only want to drill, and they are not interested in renewable energy. Again, I think that statement is a false one and needs to be corrected.

I come from an oil-producing State and certainly believe very strongly that we need to also focus our efforts on renewable energy. Republicans are simply proposing that we pay for renewable energy research and development without raising taxes on employers and consumers.

I have been pushing for years to allow for revenues from the development of ANWR to help us build out that next generation of energy source for our country. ANWR revenues alone could provide as much as $300 billion in Federal revenues for renewables--depending on what the price of oil is--if Democrats would simply allow access to it. Instead, they propose to raise taxes on whatever production is taking place and hand out loan guarantees, unfortunately, to many unstable companies.

I would also point out that allowing the Keystone Pipeline has nothing to do with drilling. Neither does pressing the EPA to settle down with its regulations that are making refineries so expensive to operate and in some cases actually shutting them down. I think most Republicans also support the new CAFE standards and many of the other renewable provisions that were in the energy law passed in 2007. This Congress has passed multiple efficiency and renewable bills out of the Energy Committee. Unfortunately, none of them have been allowed a vote on the floor of the Senate.

So I think it is wrong to suggest that Republicans are not willing to talk about anything but drilling. We just want it included in part of that discussion when we are talking about ``all of the above.'' I think we absolutely need to mean all of the above, and that includes increased domestic production and it includes a strong future for renewables. It must focus on conservation and efficiency. This is how we will get to a true level of energy independence and reduce our energy vulnerability on our insecurity.

With that, I know my time has expired. I would ask unanimous consent that the time during all quorum calls be divided equally.

I yield the floor.

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Ms. MURKOWSKI. Mr. President, I follow my friend and colleague from North Dakota who has been a real leader in these Chambers trying to educate not only those in these Chambers but people across the country as to the value and importance of the Keystone XL Pipeline and what it means to this country, not only in terms of a resource we need but also in terms of jobs and not only construction jobs but what it means to fill a pipeline and provide for a product that goes down to our refineries.

Again, when we are talking about an economic boom, where better to look than to our neighbors to the north, and I thank Senator Hoeven for his leadership on this issue.

I too wish to talk about our opportunity as a nation to do more when it comes to increasing supply within our own country. As has been mentioned on this floor numerous times today, numerous times yesterday, we are in a position as a nation to be doing more to access our own resources, to make us less dependent on countries that do not like us, to make us more energy secure, less energy vulnerable. At a time when the geopolitical scene is so shaky, every step we can take to make us more secure from a national security perspective and an energy security perspective is clearly important.

I have a substitute amendment that I have filed, which I think is important to this debate. I think it is important when we are talking about our access to supply.

What I will discuss in my 10 minutes is not new. Members have heard me talk over and over about the prolific oil resources that reside in Alaska. According to the Energy Department, we have over 40 billion barrels of oil that could be produced up North, providing not only the energy but the energy security, the jobs, and new revenues. We have a pipeline that is built already. We don't need to deal with the permitting issues there. It is there waiting to carry oil. We have overwhelming support from Alaskans.

What we don't have is what is perhaps most important, which is permission from the Federal Government to actually develop our huge oilfields. The biggest on the continent is in the northwest corner of ANWR. For years, we have sought to develop a total of 2,000 acres in what is known as the 1002 area, which Congress set aside back in 1980 to access for energy exploration. They knew then that this area had great potential. The 1002 area is projected to contain more than 10 billion barrels of oil. If you were to put it into context this way, it would be 1 billion barrels a day coming down that pipeline to us from ANWR. That is enough to replace Venezuela or Saudi imports for about 30 years. To think that we could get off of Venezuela and we would not need to go to Saudi Arabia with tin cup in hand because we are producing ourselves here--think about what that means to us. For those who bring about the speculation and argument of what that does to prices, think how this would mess up speculators if you add a million barrels a day online. Instead of embracing this as an opportunity, every excuse in the book has been thrown at us against development. You hear that the environment will be degraded, wildlife will be disturbed, and that despite a better environmental record than just about anywhere else in the world at Prudhoe Bay, we cannot do it. They don't trust us to do it. But for 20 years we have been hearing: Don't go toward ANWR; don't develop ANWR because it will take you 10 years to get that online; therefore, it is not even worth considering.

Even the late-night TV shows talk about it. Jay Leno joked about that and said, ``Democrats said it would take 10 years 10 years ago.'' If you don't get started, it is never going to happen. We are going to keep that money in the ground indefinitely if we don't get moving on it. I don't accept the arguments that have been tossed out, but they have not accepted the facts that we have presented.

I have an amendment that has changed a little bit. It is designed to address this debate. It would prohibit surface development entirely. Yet, it still allows for a very substantial portion of the oil to be accessed from our State lands, with drills reaching beneath the Coastal Plain. We do this by allowing only subsurface occupancy. We use extended horizontal drilling production. Right now, it can reach about 8 miles underground in all directions. As the technology advances, more and more of that refuge's oil could be tapped. Again, we are not going to be occupying the surface. There is no surface occupancy in this legislation. All land-based structures would be located on adjacent State lands. You would not see permanent roads, wells, buildings, and pipelines constructed on the surface of the refuge.

If you were to put together a slide show of development, the surface would be unchanged before, during, and after production. This is a photo of ANWR, and this is probably in the spring because you have tufts of grass coming up through the melting snow. This is what it would look like before, during, and after because we are underneath through the technology.

The amendment I am offering gives the Senate a chance to put reason ahead of rhetoric, policy above politics, when it comes to oil production in this State. It is a chance to end this decades-old dispute about whether development can proceed safely.

We have not just met the opposition halfway here on ANWR; we have met them 90 percent of the way. We have written into the amendment more stringent environmental safeguards than on any other Federal lands. We sacrifice 90 percent of the revenues, which Alaska is entitled to under our statehood agreement. We proposed a 50 50 Federal split. It seems that we are now begging to access a small fraction of the reserves from miles away.

It defies logic to think that, again, an idea, a concept like this would be kept off the table. I realize many are dug in on this issue. I have attempted to change the debate, change the conversation. I would ask the Senate to take a moment to consider how far we have compromised on this amendment and understand why it is different. I hope we can get a vote on it.

I ask, as a point of parliamentary inquiry, when the Senate resumes consideration of the pending energy tax bill, would it be in order for me to offer my amendment No. 1976 at that time?

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Ms. MURKOWSKI. Mr. President, I have another issue I wish to bring up today in the remainder of my time. I have two other amendments I would like the body to consider. I understand what the Chair has just said.

One of the things that I think we recognize is much of our country's production can lag due to an accumulation of redtape due to permitting issues. We know the Federal Government cannot necessarily set global commodity prices, but it can create a situation where capital that might be invested in American mineral production is stranded for long periods of time. That is what we see happening, and it is unacceptable.

What we should not do, particularly in the case of energy and minerals development, is subject a project to an unnecessarily long permitting process. I have an amendment that would begin to remedy this situation, and it would do so by using the very language the President used last week with his executive order, which he signed March 22. My amendment incorporates provisions that had pretty broad bipartisan support on the highway bill considered by this body. These provisions will work. According to the September 2010 report by the Federal Highway Administration, these reforms have cut the time required to complete environmental reviews and have mitigated the delays caused by last-minute legal challenges. What they do, more specifically, is take the President's executive order and put some teeth to it, if you will.

The President simply asked the agencies to consider making certain improvements. What I have done through my legislation is ask for a process for States to nominate items that might be subject to NEPA, allow for a shortening of review periods, and the designation of a single lead Federal agency. It is a situation that I do think rests on a good premise. The President has suggested that this is an approach that needs to be considered when, again, making such improvements.

I suggest that if it is good enough for the President and for our transportation needs, as we have seen demonstrated in the highway bill, then it is good enough for energy, mineral, and infrastructure needs as well.

I ask unanimous consent to call up amendment No. 1985, which includes all of the provisions I have described.

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Ms. MURKOWSKI. Mr. President, I am disappointed we won't have an opportunity to offer the amendments. Several of my colleagues will be coming down to offer their amendments. We have been told that the tree has been filled. The amendment I am proposing--I actually have two. One, as I have described, is probably broader in scope, but I have a second amendment that literally takes the President's executive order and provides instructions to the agencies to do a rulemaking to implement them within 1 year. This is not something that the Senator from Alaska has designed; this is the President's executive order. I think it is designed to get us to an expedited permitting process so we don't have the lag times, whether it is on transportation infrastructure or energy issues.

I think it is a good measure, and I ask my colleague from Illinois, in the effort to work together, which I appreciate, to take a look at this amendment. I apparently will not be able to introduce or call up amendment No. 1986. But again, what that bill would do is pretty simple. It is to codify portions of the President's executive order. The title is ``Improving Performance of Federal Permitting.'' He suggested it, and I thought it made sense. Now we are urging the agencies to provide for an implementation.

Again, I think this debate we are having on the floor this week is an important one. We are focused on the issues that people in this country are talking about. Folks back home are very concerned. I just met with a group of students. One young man is a high schooler from Yakutat, probably driving his first car, and they are paying in excess of $5.50 a gallon at the pump. When you are a 16- or 17-year-old boy, that is pretty high. Even when you are a person our age, that is high. He wanted to know what we are doing as a Congress to help address these issues.

I cannot overstate my disappointment, as we are dealing with these difficult issues in what we all know to be a great deliberative body, that we cannot move to a process where we can allow for fair and germane amendments that I think would help address some of the energy challenges we face, recognizing where we are today.

I see my colleague from Louisiana has joined us on the floor. My time has expired.

With that, I yield the floor.

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Ms. MURKOWSKI. Madam President, I wish to thank my colleagues who have come down to the floor this afternoon for their efforts to offer what I believe are very substantive, very meaningful amendments to the legislation that is before us. I think we can condense the message you have heard here this afternoon pretty easily.

The fact is that the bill before us is highly misleading, and I don't believe it will work. The legislation that has been introduced, S. 2204, is not going to put an end to Federal subsidies for oil and gas producers because there are none. There are no subsidies here. The oil and gas industry actually sends money to the Federal Government to the tune of tens of billions of dollars each year, and it is not the other way around. Basic tax deductions that allow businesses to retain more of their earned dollars is not the equivalent of handing them a check. So I think that is the first thing we need to get out on the table and make very clear.

The second point I want to reinforce is that S. 2204 is simply not going to work. By definition, increasing costs will not lower prices. There is nothing I can think of that, if we tax it more, it will make it more affordable and more abundant. It just doesn't work that way. And judging from both history and some recent international examples, it is virtually certain that S. 2204 would have damaging effects on this country.

Back in 1980 the Carter administration imposed a windfall profits tax. We remember that. This was a tax that was imposed on domestic crude oil. According to the Congressional Research Service, that tax reduced domestic oil production, it increased our dependence on foreign nations, and it collected far less in revenue than was expected.

The example that is more current on the international scene is one I spoke to yesterday, and that is the example in Great Britain. A year after raising its oil tax rates, production declines in Great Britain have increased from 6 percent per year to 18 percent per year. As a result, Great Britain is reversing that course. They are now planning to offer new incentives to encourage producers to return to the North Sea.

So all we need to do is look at a real-time example of what one country did in an effort to deal with high gas prices. They increase the taxes, and investment and production goes overseas. Now they are turning the corner on this, and they are working to reduce their taxes.

I think there is clearly a better way. The other side of the aisle has refused to even consider amendments that will increase Federal oil and gas production, create good jobs in this country, generate billions of dollars of Federal revenues at a time that we desperately need them, restrain if not reduce gasoline prices, and increase our domestic energy security.

We believe very strongly that the solution to these many problems should be a reasonable combination of increased domestic production, for which we have huge world-class untapped resources that are still locked up by our Federal Government--America could be the world's largest oil producer, and we could be independent of OPEC. That is real. That is achievable. But we have to set our mind to it, we have to make that happen, and we have to have the Federal Government get out of the way or help us with the right incentives to do so.

The hundreds of billions of dollars in Federal revenues from increased production could, and should, help support the research and the development of our renewable resources, our alternative energy, as well as efficiency and conservation. We know that building out the energy of the future--renewables, alternatives--is expensive. How are we going to fund it? Well, many of us believe that resources that come from expanded production could help us with that. Yet what we are presented with today is a bill that does nothing more than raise taxes--raise taxes on an industry that has created good jobs, is providing us with the resource that we need, and we are not even allowed to offer a single amendment to produce one additional drop of American oil. I think that is unfortunate. I wish it were otherwise.

But I do think the debate, the discussion we have had on this floor in the past couple of days has been good and helpful in helping to educate the American public in terms of what we truly have as a nation in terms of our capacity and our capability to produce if given the opportunity.

Madam President, I yield the floor.

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