President-elect Barack Obama has quietly dropped his original proposal for a windfall profits tax on oil companies, according to a spokesperson.
Obama has jettisoned the plan after the price of oil has fallen precipitously in recent months. An unidentified aide told Reuters that Obama announced the policy back when oil was above $80 per barrel. However, the price of crude oil has fallen $100 per barrel since it hit a record level of $145.29 on the New York Mercantile Exchange on July 3.
The money from the tax was supposed to be used to help low-income families pay their energy bills. "It isn't right that oil companies are making record profits at a time when ordinary Americans are going into debt trying to pay rising energy costs," Obama said back in May. "That's why we'll put a windfall profits tax on oil companies and use it to help Indiana families pay their heating and cooling bills and reduce energy costs."
However, the oil industry has fiercely resisted calls for a windfall profits tax, pointing out that the tax did not work when it was instituted in the 1970s by the Carter administration.
A small business advocacy group, the American Small Business League, first pointed out the absence of the windfall profits tax proposal on the Obama transition team's Web site last week (see Group Charges Obama is Backtracking from Tax Promises). ASBL president Lloyd Chapman blames the oil and gas industry for pressuring the Obama team to remove the proposal suddenly from its Web site with no explanation.
"The oil and gas industry needs to be regulated," he told WebCPA. "Skyrocketing gas prices contributed to the downfall of the big three auto makers, and I don't think we should allow the big oil producers to have that power over our economy."
He is also upset that the Obama team has removed another proposal from its Web site requiring the federal government to stop awarding contracts to large companies that are supposed to go to small businesses. A 1997 law required 23 percent of federal contracts to go to small businesses that have less than 500 employees, but Chapman contends that up to $200 million per day in federal contracts is going to Fortune 500 companies that should have gone to small businesses.
"Over 80 percent of the new jobs in our country have come from small businesses," he said. "When you watch the news, they're putting money into Wall Street and Detroit, and now they're talking about bailing out the states. Now Obama is going back on promises to help small businesses. I want Barack Obama to end the diversion of federal contracts to corporate giants."
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access