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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2672 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 2672

To amend the Internal Revenue Code of 1986 to provide that oil and gas 
   companies will not be eligible for the effective rate reductions 
              enacted in 2004 for domestic manufacturers.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 27, 2006

Mr. Reid (for Mr. Kerry) introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to provide that oil and gas 
   companies will not be eligible for the effective rate reductions 
              enacted in 2004 for domestic manufacturers.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Restore a Rational Tax Rate on 
Petroleum Production Act of 2006''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) like many other countries, the United States has long 
        provided export-related benefits under its tax law,
            (2) producers and refiners of oil and natural gas were 
        specifically denied the benefits of those export-related tax 
        provisions,
            (3) those export-related tax provisions were successfully 
        challenged by the European Union as being inconsistent with our 
        trade agreements,
            (4) the Congress responded by repealing the export-related 
        benefits and enacting a substitute benefit that was an 
        effective rate reduction for United States manufacturers,
            (5) producers and refiners of oil and natural gas were made 
        eligible for the rate reduction even though they suffered no 
        detriment from repeal of the export-related benefits, and
            (6) the decision to provide the effective rate reduction to 
        producers and refiners of oil and natural gas has operated as a 
        reverse windfall profits tax, lowering the tax rate on the 
        windfall profits they are currently enjoying.

SEC. 3. DENIAL OF DEDUCTION FOR INCOME ATTRIBUTABLE TO DOMESTIC 
              PRODUCTION OF OIL, NATURAL GAS, OR PRIMARY PRODUCTS 
              THEREOF.

    (a) In General.--Subparagraph (B) of section 199(c)(4) of the 
Internal Revenue Code of 1986 (relating to exceptions) is amended by 
striking ``or'' at the end of clause (ii), by striking the period at 
the end of clause (iii) and inserting ``, or'', and by inserting after 
clause (iii) the following new clause:
                            ``(iv) the production, refining, 
                        processing, transportation, or distribution of 
                        oil, natural gas, or any primary product 
                        thereof.''.
    (b) Conforming Amendments.--Section 199(c)(4) of such Code is 
amended--
            (1) in subparagraph (A)(i)(III) by striking ``electricity, 
        natural gas,'' and inserting ``electricity'', and
            (2) in subparagraph (B)(ii) by striking ``electricity, 
        natural gas,'' and inserting ``electricity''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.
                                 <all>
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