Wyden Unveils Taxing Big Oil Profiteers Act

Press Release

Senate Finance Chair Ron Wyden, D-Ore., today unveiled the Taxing Big Oil Profiteers Act. The bill would double the tax rate of Big Oil's excess profits, impose an excise tax on stock buybacks benefiting wealthy shareholders, and close one of Big Oil's favorite tax loopholes.

The bill is also sponsored by Senators Schumer, Murray, Stabenow, Casey, Padilla, Hirono, Booker, Klobuchar, Reed, Warnock, Feinstein, Blumenthal, and Van Hollen

"Our broken tax code is working for Big Oil, not American families. While Americans pay more to fill up their gas tanks, Big Oil companies are raking in record profits, rewarding their CEOs and wealthy shareholders with massive stock buybacks, and using special loopholes in the tax code to pay next to nothing in taxes," said Chair Wyden. "Our tax code should benefit the American people, not oil executives and their wealthy shareholders. Our Taxing Big Oil Profiteers Act would help reverse perverse incentives to price gouge by doubling the corporate tax rate on companies' excess profits, eliminating egregious buybacks, and reducing accounting tricks. By contrast, companies that provide relief to consumers by reducing prices or investing in new supply would not be affected. It's long past time to fix our broken tax code."

First, the bill applies a 21 percent additional tax on the excess profits of oil and gas companies with more than $1 billion in annual revenue. Excess profits are calculated by subtracting a normal return--a 10 percent return on expenses--from current profits. Excess profits are subject to the 21 percent additional tax, which would be added to any regular income tax due by the taxpayer.

The senators' new approach differs from other proposed windfall profits taxes by applying the tax based on profit margins, not oil prices. This proposal more accurately assesses companies' financial picture. Companies making normal profits based on their expenses would not pay any additional tax.

Second, the bill imposes 25 percent excise tax on stock that is repurchased by the corporation. For example, Exxon announced last month its intention to repurchase $30 billion in stock by the end of 2023. Similarly, Chevon announced last month its intention to repurchase $10 billion in stock by the end of 2022.

Third, the bill closes a loophole that allows big oil companies to game the value of their inventories by using an accounting method that ensures they are always deducting the newest, most expensive inventory, rather than the oldest, least expensive inventory. This allows them to understate their true profits and defer taxes on those profits indefinitely.

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