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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1981 Introduced in Senate (IS)]

109th CONGRESS
  1st Session
                                S. 1981

   To amend the Internal Revenue Code of 1986 to impose a temporary 
   windfall profit tax on crude oil, to rebate a portion of the tax 
 collected back to American consumers, to fund programs under the Low-
 Income Home Energy Assistance Act of 1981 and tax incentives for the 
 manufacture of energy efficient motor vehicles by using a portion of 
    the proceeds of such tax, and to deposit the balance of the tax 
collected into the Highway Trust Fund to support the funding of highway 
       projects and to aid highway users, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            November 9, 2005

  Mr. Durbin 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 impose a temporary 
   windfall profit tax on crude oil, to rebate a portion of the tax 
 collected back to American consumers, to fund programs under the Low-
 Income Home Energy Assistance Act of 1981 and tax incentives for the 
 manufacture of energy efficient motor vehicles by using a portion of 
    the proceeds of such tax, and to deposit the balance of the tax 
collected into the Highway Trust Fund to support the funding of highway 
       projects and to aid highway users, and for other purposes.

    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 ``Windfall Profits Tax Act of 2005''.

SEC. 2. WINDFALL PROFITS TAX.

    (a) In General.--Subtitle E of the Internal Revenue Code of 1986 
(relating to alcohol, tobacco, and certain other excise taxes) is 
amended by adding at the end thereof the following new chapter:

              ``CHAPTER 56--WINDFALL PROFITS ON CRUDE OIL

``Sec. 5896. Imposition of tax.
``Sec. 5897. Windfall profit; removal price; adjusted base price; 
                            qualified investment.
``Sec. 5898. Special rules and definitions.

``SEC. 5896. IMPOSITION OF TAX.

    ``(a) In General.--In addition to any other tax imposed under this 
title, there is hereby imposed on any integrated oil company (as 
defined in section 291(b)(4)) an excise tax equal to the amount equal 
to 50 percent of the windfall profit from all barrels of taxable crude 
oil removed from the property during each taxable year.
    ``(b) Fractional Part of Barrel.--In the case of a fraction of a 
barrel, the tax imposed by subsection (a) shall be the same fraction of 
the amount of such tax imposed on the whole barrel.
    ``(c) Tax Paid by Producer.--The tax imposed by this section shall 
be paid by the producer of the taxable crude oil.

``SEC. 5897. WINDFALL PROFIT; REMOVAL PRICE; ADJUSTED BASE PRICE.

    ``(a) General Rule.--For purposes of this chapter, the term 
`windfall profit' means the excess of the removal price of the barrel 
of taxable crude oil over the adjusted base price of such barrel.
    ``(b) Removal Price.--For purposes of this chapter--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `removal price' means the amount for which 
        the barrel of taxable crude oil is sold.
            ``(2) Sales between related persons.--In the case of a sale 
        between related persons, the removal price shall not be less 
        than the constructive sales price for purposes of determining 
        gross income from the property under section 613.
            ``(3) Oil removed from property before sale.--If crude oil 
        is removed from the property before it is sold, the removal 
        price shall be the constructive sales price for purposes of 
        determining gross income from the property under section 613.
            ``(4) Refining begun on property.--If the manufacture or 
        conversion of crude oil into refined products begins before 
        such oil is removed from the property--
                    ``(A) such oil shall be treated as removed on the 
                day such manufacture or conversion begins, and
                    ``(B) the removal price shall be the constructive 
                sales price for purposes of determining gross income 
                from the property under section 613.
            ``(5) Property.--The term `property' has the meaning given 
        such term by section 614.
    ``(c) Adjusted Base Price Defined.--
            ``(1) In general.--For purposes of this chapter, the term 
        `adjusted base price' means $40 for each barrel of taxable 
        crude oil plus an amount equal to--
                    ``(A) such base price, multiplied by
                    ``(B) the inflation adjustment for the calendar 
                year in which the taxable crude oil is removed from the 
                property.
        The amount determined under the preceding sentence shall be 
        rounded to the nearest cent.
            ``(2) Inflation adjustment.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the inflation adjustment for any calendar year after 
                2006 is the percentage by which--
                            ``(i) the implicit price deflator for the 
                        gross national product for the preceding 
                        calendar year, exceeds
                            ``(ii) such deflator for the calendar year 
                        ending December 31, 2005.
                    ``(B) First revision of price deflator used.--For 
                purposes of subparagraph (A), the first revision of the 
                price deflator shall be used.

``SEC. 5898. SPECIAL RULES AND DEFINITIONS .

    ``(a) Withholding and Deposit of Tax.--The Secretary shall provide 
such rules as are necessary for the withholding and deposit of the tax 
imposed under section 5896 on any taxable crude oil.
    ``(b) Records and Information.--Each taxpayer liable for tax under 
section 5896 shall keep such records, make such returns, and furnish 
such information (to the Secretary and to other persons having an 
interest in the taxable crude oil) with respect to such oil as the 
Secretary may by regulations prescribe.
    ``(c) Return of Windfall Profit Tax.--The Secretary shall provide 
for the filing and the time of such filing of the return of the tax 
imposed under section 5896.
    ``(d) Definitions.--For purposes of this chapter--
            ``(1) Producer.--The term `producer' means the holder of 
        the economic interest with respect to the crude oil.
            ``(2) Crude oil.--
                    ``(A) In general.--The term `crude oil' includes 
                crude oil condensates and natural gasoline.
                    ``(B) Exclusion of newly discovered oil.--Such term 
                shall not include any oil produced from a well drilled 
                after the date of the enactment of the Windfall Profits 
                Tax Act of 2005, except with respect to any oil 
                produced from a well drilled after such date on any 
                proven oil or gas property (within the meaning of 
                section 613A(c)(9)(A)).
            ``(3) Barrel.--The term `barrel' means 42 United States 
        gallons.
    ``(e) Adjustment of Removal Price.--In determining the removal 
price of oil from a property in the case of any transaction, the 
Secretary may adjust the removal price to reflect clearly the fair 
market value of oil removed.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
chapter.
    ``(g) Termination.--This section shall not apply to taxable crude 
oil removed after the date which is 10 years after the date of the 
enactment of this section.''.
    (b) Clerical Amendment.--The table of chapters for subtitle E of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

             ``Chapter 56. Windfall Profit on Crude Oil.''.

    (c) Deductibility of Windfall Profit Tax.--The first sentence of 
section 164(a) of the Internal Revenue Code of 1986 (relating to 
deduction for taxes) is amended by inserting after paragraph (5) the 
following new paragraph:
            ``(6) The windfall profit tax imposed by section 5896.''.
    (d) American Consumer Rebate.--
            (1) In general.--Subchapter B of chapter 65 of the Internal 
        Revenue Code of 1986 (relating to rules of special application 
        in the case of abatements, credits, and refunds) is amended by 
        adding at the end the following new section:

``SEC. 6430. AMERICAN CONSUMER REBATE.

    ``(a) General Rule.--Except as otherwise provided in this section, 
each individual shall be treated as having made a payment against the 
tax imposed by chapter 1 in an amount equal to_
            ``(1) in the case of any taxable year beginning in 2006, 
        $150, and
            ``(2) in the case of any taxable year beginning after 2006, 
        the applicable amount.
    ``(b) Applicable Amount.--For purposes of this section, the 
applicable amount for any taxpayer for any taxable year shall be 
determined by the Secretary not later than December 31 (beginning in 
2007) taking into account the number of such taxpayers and 75 percent 
of the amount of revenues in the Treasury resulting from the tax 
imposed by section 5896 for such taxable year.
    ``(c) Credits and Refunds.--Under regulations prescribed by the 
Secretary, any amount treated as a payment under subsection (a) for the 
taxable year shall be credited against the tax liability of the 
taxpayer under section 1 for such taxable year or, in the absence of 
such tax liability of the taxpayer for such taxable year, refunded to 
the taxpayer.
    ``(d) Certain Persons Not Eligible.--This section shall not apply 
to--
            ``(1) any individual with respect to whom a deduction under 
        section 151 is allowable to another taxpayer for a taxable year 
        beginning in the calendar year in which such individual's 
        taxable year begins,
            ``(2) any estate or trust, or
            ``(3) any nonresident alien individual.''.
            (2) Conforming amendment.--Section 1324(b)(2) of title 31, 
        United States Code, is amended by inserting before the period 
        ``, or enacted by the Windfall Profits Tax Act of 2005''.
            (3) Clerical amendment.--The table of sections for 
        subchapter B of chapter 65 of the Internal Revenue Code of 1986 
        is amended by adding at the end the following new item:

``Sec. 6430. American consumer rebate.''.
            (4) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act.
    (e) Low Income Home Energy Assistance Trust Fund.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 (relating to trust fund code) is amended 
        by adding at the end the following new section:

``SEC. 9511. LOW-INCOME HOME ENERGY ASSISTANCE TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Low-Income Home 
Energy Assistance Trust Fund', consisting of any amount appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the Low-Income Home Energy Assistance Trust Fund for each fiscal year 
beginning after September 30, 2005, amounts equivalent to 7.5 percent 
of the taxes received in the Treasury under section 5896 (relating to 
windfall profit tax on crude oil) for such fiscal year.
    ``(c) Expenditures From Trust Fund.--Amounts in the Low Income Home 
Energy Assistance Trust Fund shall be available, without further 
appropriation, for each fiscal year to carry out the program under the 
Low-Income Home Energy Assistance Act of 1981 for which funds are 
authorized under section 2602(b) of such Act for such fiscal year, but 
only if not less than $1,800,000,000 has been appropriated for such 
program for such fiscal year (determined without regard to any amount 
appropriated to the Low Income Home Energy Assistance Trust Fund).''.
            (2) Clerical amendment.--The table of sections for such 
        subchapter is amended by adding at the end the following new 
        item:

        ``Sec. 9511. Low-Income Home Energy Assistance Trust Fund.''.
    (f) Energy Efficient Motor Vehicles Manufacturing Credit.--
            (1) In general.--Subpart B of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        foreign tax credit, etc.) is amended by adding at the end the 
        following new section:

``SEC. 30D. ENERGY EFFICIENT MOTOR VEHICLES MANUFACTURING CREDIT.

    ``(a) Credit Allowed.--In the case of an eligible taxpayer, subject 
to a credit allocation under subsection (e) to such eligible taxpayer, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year to an amount equal to the sum of--
            ``(1) the initial investment credit determined under 
        subsection (b) for the taxable year,
            ``(2) the fuel economy achievement credit determined under 
        subsection (c) for such taxable year, and
            ``(3) the eligible components R&D credit determined under 
        subsection (d) for such taxable year.
    ``(b) Initial Investment Credit.--For purposes of this section, the 
initial investment credit is equal to 20 percent of the qualified 
investment of an eligible taxpayer with respect to energy efficient 
motor vehicles during the taxable year beginning in 2006.
    ``(c) Fuel Economy Achievement Credit.--For purposes of this 
section--
            ``(1) In general.--In the case of an eligible taxpayer who 
        meets the requirements of paragraph (2) for a model year ending 
        in a taxable year specified in the table contained in paragraph 
        (3), the fuel economy achievement credit for such taxable year 
        is equal to 30 percent of the sum of--
                    ``(A) at the election of the eligible taxpayer, 
                such qualified investment for any preceding taxable 
                year beginning after 2005 if such taxable year has not 
                previously been taken into account under this 
                subsection by such taxpayer, plus
                    ``(B) at the election of the eligible taxpayer, the 
                qualified investment with respect to energy efficient 
                motor vehicles of the eligible taxpayer for the taxable 
                year beginning in 2015.
            ``(2) Demonstrated combined fleet economy improvements.--
        The requirements of this paragraph are met for any model year 
        ending in a taxable year if the eligible taxpayer can 
        demonstrate to the satisfaction of the Secretary that the 
        percentage by which the taxpayer's overall combined fuel 
        economy standard for the taxpayer's vehicle fleet for such 
        model year exceeds such standard for such taxpayer's 2005 model 
        year as reported to the National Highway Traffic Safety 
        Administration under section 32907 of title 49, United States 
        Code, is not less than the percentage determined for such model 
        year under paragraph (3).
            ``(3) Percentage increase.--The percentage determined under 
        this paragraph for any taxable year is equal to--

``Model year ending in                                       Percentage
  taxable year                                                 increase
        2008...................................................      5 
        2009...................................................     10 
        2010...................................................     15 
        2011...................................................     20 
        2012...................................................   27.5 
        2013...................................................     35 
        2014...................................................   42.5 
        2015...................................................     50.
    ``(d) Eligible Components R&D Credit.--For purposes of this 
section, the eligible R&D credit for any taxable year is equal to 30 
percent of the research and development costs paid or incurred by an 
eligible taxpayer for such taxable year with respect to eligible 
components used or to be used in the manufacture of energy efficient 
motor vehicles.
    ``(e) Limitation.--
            ``(1) Initial investment credit and fuel economy 
        achievement credit.--Subject to paragraph (2), the aggregate 
        amount of initial investment credits and fuel economy 
        achievement credits allowed under subsection (a) for any 
        taxable year beginning in a calendar year after 2005 shall be 
        allocated by the Secretary among all eligible taxpayers--
                    ``(A) based on each eligible taxpayer's percentage 
                of the total qualified investment of all such 
                taxpayers, and
                    ``(B) such that such aggregate amount does not 
                exceed--
                            ``(i) $1,000,000,000, plus
                            ``(ii) any amount of credit unallocated 
                        during any preceding calendar year.
            ``(2) Eligible components r&d credit.--Of the dollar amount 
        available for allocation under paragraph (1) for any taxable 
        year, 10 percent of such amount shall be allocated in the same 
        manner by the Secretary among all eligible taxpayers with 
        respect to the eligible components R&D credit.
    ``(f) Qualified Investment.--For purposes of this section--
            ``(1) In general.--The qualified investment for any taxable 
        year is equal to the incremental costs incurred during such 
        taxable year--
                    ``(A) to re-equip or expand any manufacturing 
                facility of the eligible taxpayer to produce energy 
                efficient motor vehicles or to produce eligible 
                components, and
                    ``(B) for engineering integration of such vehicles 
                and components as described in subsection (h).
            ``(2) Attribution rules.--In the event a facility of the 
        eligible taxpayer produces both energy efficient motor vehicles 
        and conventional motor vehicles, or eligible and non-eligible 
        components, only the qualified investment attributable to 
        production of energy efficient motor vehicles and the research 
        and development costs attributable to eligible components shall 
        be taken into account.
    ``(g) Energy Efficient Motor Vehicles and Eligible Components.--For 
purposes of this section--
            ``(1) Energy efficient motor vehicle.--The term `energy 
        efficient motor vehicle' means--
                    ``(A) any new advanced lean burn technology motor 
                vehicle (as defined in section 30B(c)(3) determined 
                without regard to subparagraph (A)(iv)(II) thereof or 
                the weight limitation under subparagraph (A)(iv)(I) 
                thereof),
                    ``(B) any new qualified hybrid motor vehicle (as 
                defined in section 30B(d)(3)(A) determined without 
                regard to subparagraph (A)(ii)(II) thereof, the weight 
                limitation under subparagraph (A)(ii)(I) thereof, and 
                subparagraph (A)(iv) thereof), or
                    ``(C) any other new technology motor vehicle 
                identified by the Secretary as offering a substantial 
                increase in fuel economy.
            ``(2) Eligible components.--The term `eligible component' 
        means any component inherent to any energy efficient motor 
        vehicle, including--
                    ``(A) with respect to any gasoline-electric new 
                qualified hybrid motor vehicle--
                            ``(i) electric motor or generator,
                            ``(ii) power split device,
                            ``(iii) power control unit,
                            ``(iv) power controls,
                            ``(v) integrated starter generator, or
                            ``(vi) battery,
                    ``(B) with respect to any new advanced lean burn 
                technology motor vehicle--
                            ``(i) diesel engine,
                            ``(ii) turbocharger,
                            ``(iii) fuel injection system, or
                            ``(iv) after-treatment system, such as a 
                        particle filter or NOx absorber, and
                    ``(C) with respect to any energy efficient motor 
                vehicle, any other component approved by the Secretary.
    ``(h) Engineering Integration Costs.--For purposes of subsection 
(f)(1)(B), costs for engineering integration are costs incurred prior 
to the market introduction of energy efficient vehicles for engineering 
tasks related to--
            ``(1) incorporating eligible components into the design of 
        energy efficient motor vehicles, and
            ``(2) designing new tooling and equipment for production 
        facilities which produce eligible components or energy 
        efficient motor vehicles.
    ``(i) Eligible Taxpayer.--For purposes of this section, the term 
`eligible taxpayer' means, with respect to any taxable year, any 
taxpayer if more than 25 percent of the taxpayer's gross receipts for 
the taxable year is derived from the manufacture of motor vehicles or 
any component parts of such vehicles.
    ``(j) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for the taxable year shall not exceed the excess of--
            ``(1) the sum of--
                    ``(A) the regular tax liability (as defined in 
                section 26(b)) for such taxable year, plus
                    ``(B) the tax imposed by section 55 for such 
                taxable year, over
            ``(2) the sum of the credits allowable under subpart A and 
        sections 27, 30, 30B, and 30C for the taxable year.
    ``(k) Reduction in Basis.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this paragraph) result from such expenditure shall be reduced 
by the amount of the credit so allowed.
    ``(l) No Double Benefit.--
            ``(1) Coordination with other deductions and credits.--The 
        amount of any deduction or other credit allowable under this 
        chapter for any cost taken into account in determining the 
        amount of the credit under subsection (a) shall be reduced by 
        the amount of such credit attributable to such cost.
            ``(2) Research and development costs.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any amount described in subsection 
                (d) taken into account in determining the amount of the 
                credit under subsection (a) for any taxable year shall 
                not be taken into account for purposes of determining 
                the credit under section 41 for such taxable year.
                    ``(B) Costs taken into account in determining base 
                period research expenses.--Any amounts described in 
                subsection (d) taken into account in determining the 
                amount of the credit under subsection (a) for any 
                taxable year which are qualified research expenses 
                (within the meaning of section 41(b)) shall be taken 
                into account in determining base period research 
                expenses for purposes of applying section 41 to 
                subsequent taxable years.
    ``(m) Business Carryovers Allowed.--If the credit allowable under 
subsection (a) for a taxable year exceeds the limitation under 
subsection (j) for such taxable year, such excess (to the extent of the 
credit allowable with respect to property subject to the allowance for 
depreciation) shall be allowed as a credit carryback and carryforward 
under rules similar to the rules of section 39.
    ``(n) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Definitions.--Any term which is used in this section 
        and in chapter 329 of title 49, United States Code, shall have 
        the meaning given such term by such chapter.
            ``(2) Special rules.--Rules similar to the rules of 
        paragraphs (4) and (5) of section 179A(e) and paragraphs (1) 
        and (2) of section 41(f) shall apply.
    ``(o) Election Not to Take Credit.--No credit shall be allowed 
under subsection (a) for any property if the taxpayer elects not to 
have this section apply to such property.
    ``(p) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out the provisions of this section.
    ``(q) Termination.--This section shall not apply to any qualified 
investment made after December 31, 2015.''.
            (2) Conforming amendments.--
                    (A) Section 1016(a) of such Code is amended by 
                striking ``and'' at the end of paragraph (36), by 
                striking the period at the end of paragraph (37) and 
                inserting ``, and'', and by adding at the end the 
                following new paragraph:
            ``(38) to the extent provided in section 30D(k).''.
                    (B) Section 6501(m) of such Code is amended by 
                inserting ``30D(o),'' after ``30C(e)(5),''.
                    (C) The table of sections for subpart B of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                inserting after the item relating to section 30C the 
                following new item:

``Sec. 30D. Energy efficient motor vehicles manufacturing credit.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts incurred in taxable years beginning 
        after December 31, 2005.
    (g) Transfer to Highway Trust Fund to Fund Highway Projects and Aid 
Highway Users.--
            (1) In general.--Section 9503(b)(1) of the Internal Revenue 
        Code of 1986 (relating to certain taxes) is amended--
                    (A) by inserting ``(before January 1, 2016, in the 
                case of taxes under section 5896)'' after ``2011'',
                    (B) by striking ``and'' at the end of subparagraph 
                (D),
                    (C) by striking the period at the end of 
                subparagraph (E) and inserting ``, and'',
                    (D) by inserting after subparagraph (E) the 
                following new subparagraph:
                    ``(F) section 5896 (relating to windfall profit 
                tax).'', and
                    (E) by adding at the end the following new 
                sentence: ``For purposes of this paragraph, the 
                aggregate amount which is appropriated to the Highway 
                Trust Fund as determined by reference to taxes received 
                under section 5896 shall be reduced by the aggregate 
                amount of the American consumer rebate determined under 
                section 6430, the amount appropriated for each fiscal 
                year to the Low-Income Home Energy Assistance Trust 
                Fund under section 9511(b), and an amount of 
                $1,000,000,000 for each of fiscal years 2006 through 
                2015.''
            (2) Portion to mass transit account.--Section 9503(e)(2) of 
        such Code (relating to transfers to Mass Transit Account) is 
        amended by inserting ``and 18.5 percent of the amounts 
        appropriated to the Highway Trust Fund under subsection (b) 
        which are attributable to the tax under section 5896'' after 
        ``1983''.
            (3) Special rule regarding highway projects funded by 
        windfall profit tax revenues.--Notwithstanding section 120 of 
        title 23, United States Code, the Federal share of the cost of 
        any project or activity carried out using funds deposited in 
        the Highway Trust Fund under section 9503(b)(1)(F) of the 
        Internal Revenue Code of 1986 shall be 100 percent to the 
        extent such funds are available under such section.
    (h) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall apply to crude oil removed after the date of 
the enactment of this Act, in taxable years ending after such date.
                                 <all>
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