Senate Strips Tax Hike from Energy Bill

The U.S. Senate has passed a version of the energy bill after removing a controversial tax increase on major oil and gas producers from the version approved by the House.

The measure passed 86-8 and included improved fuel economy standards that would require cars, trucks and SUVs to reach an industry average of 35 miles per gallon in the next 13 years, 10 miles per gallon more than they achieve today. The bill would also boost the use of ethanol to 36 billion gallons per year by 2022, 21 billion of which would have to come from sources other then corn.

But Senate Republicans forced Democrats to remove provisions that would have repealed the Section 199 domestic manufacturing tax incentive for the top five oil and gas producers, and tightened the rules on the payment of taxes on foreign income.

The stripped-down version also eliminated tax incentives for various forms of renewable energy, such as wind and solar, along with a mandate that would have required investor-owned utilities to generate at least 15 percent of their energy from renewable sources.

The changes occurred after Democrats came one vote shy of overcoming a threatened GOP filibuster.

"Today's vote was very close, but the outcome will likely save the energy bill for this year," said Sen. Pete Domenici, R-N.M., ranking member of the Senate Energy and Natural Resources Committee, in a statement. "By rejecting the nearly $22 billion in tax increases added to this bill, the Senate will instead go back to work on a package that contains the right priorities and can be signed into law."

The bill will now go back to the House for another vote.

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