II 

★(Star Print)

112TH CONGRESS 

1ST SESSION S. 552 

To reduce the Federal budget deficit by creating a surtax on high income 

individuals and eliminating big oil and gas company tax loopholes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 10, 2011 

Mr. SANDERS (for himself and Ms. MIKULSKI) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To reduce the Federal budget deficit by creating a surtax 

on high income individuals and eliminating big oil and 

gas company tax loopholes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Emergency Deficit Re5 duction Act’’. 

6 SEC. 2. FINDINGS. 

7 The Senate finds the following: 

8 (1) At a time when our Nation has a $14.2 tril9 lion national debt and a $1.6 trillion annual deficit, 

10 moving aggressively toward deficit reduction means 


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1 that we must include not only well-targeted budget 

2 cuts, but revenue raised in a fair and economically 

3 just way. Questions every Member of Congress 

4 should be asking are the following: 

5 (A) Do we ask the highest paid executives 

6 on Wall Street to give up a $1 million a year 

7 tax break, or do we ask senior citizens to go 

8 cold in the winter by cutting the Low Income 

9 Home Energy Assistance Program? 

10 (B) Do we ask Exxon Mobil and other big 

11 oil companies to give up their tax breaks, or do 

12 we ask over 9 million college students to go fur13 ther into debt by cutting Pell Grants by $5.7 

14 billion? 

15 (C) Do we stop cutting taxes for the rich16 est 400 American families, who earned an aver17 age of $345 million in 2007, or do we delay So18 cial Security benefits to 500,000 Americans by 

19 a $1.7 billion cut in the Social Security Admin20 istration? 

21 (D) Do we establish an emergency deficit 

22 reduction surtax on millionaires and billion23 aires, or do we deny over 200,000 little children 

24 the opportunity to enroll in Head Start by cut25 ting this program by $1.1 billion? 


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1 (E) Do we finally tax hedge fund man2 agers who make at least $1 billion at a higher 

3 rate than police officers, teachers, firefighters, 

4 and nurses, or will 11 million Americans be de5 nied access to quality primary healthcare by a 

6 $1.3 billion cut in community health centers? 

7 (2) At a time when the wealthiest people in this 

8 country are doing phenomenally well, when the effec9 tive Federal tax rates for the richest Americans are 

10 the lowest on record, and when the top 2 percent of 

11 taxpayers have received hundreds of billions of dol12 lars in tax breaks in recent years, it would be mor13 ally wrong for the United States Congress to move 

14 towards a balanced budget on the backs of the mid15 dle class, the elderly, the sick, and the most vulner16 able people in our society while asking nothing of 

17 the highest income earners and most profitable cor18 porations. 

19 (3) Creating an emergency deficit reduction 

20 surtax on income over $1 million will reduce the def21 icit in a fair and economically just way by increasing 

22 revenue from those who can afford it the most. 

23 (4) From 2000 to 2010, the 5 largest oil com24 panies in the United States made nearly $1 trillion 

25 in profits, yet some of them paid nothing in Federal 


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1 income taxes in recent years. Ending outdated and 

2 unnecessary tax credits, deductions, and subsidies 

3 for big oil companies is a fair and economically just 

4 way to raise revenue and reduce the deficit. 

5 (5) In the midst of the worst recession since the 

6 Great Depression, America’s middle class and work7 ing families have already paid a very heavy price in 

8 terms of lost jobs, lost homes, lost wages, and lost 

9 opportunity. The time has come to ask the wealthi10 est in our society and the most profitable corpora11 tions in America to help our Nation address its def12 icit crisis. Any deficit reduction package must in13 clude raising revenue from the wealthy and elimi14 nating tax breaks for big oil companies. 

15 SEC. 3. EMERGENCY DEFICIT REDUCTION SURCHARGE ON 

16 HIGH INCOME INDIVIDUALS. 

17 (a) IN GENERAL.—Subchapter A of chapter 1 of the 

18 Internal Revenue Code of 1986 is amended by adding at 

19 the end the following new part: 

20 ‘‘PART VIII—EMERGENCY DEFICIT REDUCTION 

21 SURCHARGE ON HIGH INCOME INDIVIDUALS 

‘‘Sec. 59B. Emergency deficit reduction surcharge on high income individuals. 


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1 ‘‘SEC. 59B. EMERGENCY DEFICIT REDUCTION SURCHARGE 

2 ON HIGH INCOME INDIVIDUALS. 

3 ‘‘(a) GENERAL RULE.—In the case of a taxpayer 

4 other than a corporation, there is hereby imposed (in addi5 tion to any other tax imposed by this subtitle) a tax equal 

6 to 5.4 percent of so much of the modified adjusted gross 

7 income of the taxpayer as exceeds $1,000,000 ($2,000,000 

8 in the case of any taxpayer making a joint return under 

9 section 6013). 

10 ‘‘(b) MODIFIED ADJUSTED GROSS INCOME.—For 

11 purposes of this section, the term ‘modified adjusted gross 

12 income’ means adjusted gross income reduced by any de13 duction (not taken into account in determining adjusted 

14 gross income) allowed for investment interest (as defined 

15 in section 163(d)). In the case of an estate or trust, ad16 justed gross income shall be determined as provided in sec17 tion 67(e). 

18 ‘‘(c) SPECIAL RULES.— 

19 ‘‘(1) NONRESIDENT ALIEN.—In the case of a 

20 nonresident alien individual, only amounts taken 

21 into account in connection with the tax imposed 

22 under section 871(b) shall be taken into account 

23 under this section. 

24 ‘‘(2) CITIZENS AND RESIDENTS LIVING

25 ABROAD.—The dollar amount in effect under sub26 section (a) shall be decreased by the excess of— 


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1 ‘‘(A) the amounts excluded from the tax2 payer’s gross income under section 911, over 

3 ‘‘(B) the amounts of any deductions or ex4 clusions disallowed under section 911(d)(6) 

5 with respect to the amounts described in sub6 paragraph (A). 

7 ‘‘(3) CHARITABLE TRUSTS.—Subsection (a) 

8 shall not apply to a trust all the unexpired interests 

9 in which are devoted to one or more of the purposes 

10 described in section 170(c)(2)(B). 

11 ‘‘(4) NOT TREATED AS TAX IMPOSED BY THIS

12 CHAPTER FOR CERTAIN PURPOSES.—The tax im13 posed under this section shall not be treated as tax 

14 imposed by this chapter for purposes of determining 

15 the amount of any credit under this chapter or for 

16 purposes of section 55.’’. 

17 (b) CLERICAL AMENDMENT.—The table of parts for 

18 subchapter A of chapter 1 of the Internal Revenue Code 

19 of 1986 is amended by adding at the end the following 

20 new item: 

‘‘PART VIII. EMERGENCY DEFICIT REDUCTION SURCHARGE ON HIGH INCOME

INDIVIDUALS.’’. 

21 (c) SECTION 15 NOT TO APPLY.—The amendment 

22 made by subsection (a) shall not be treated as a change 

23 in a rate of tax for purposes of section 15 of the Internal 

24 Revenue Code of 1986. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2010. 

4 SEC. 4. REPEAL OF EXPENSING AND 60-MONTH AMORTIZA5 TION OF INTANGIBLE DRILLING COSTS. 

6 Subsection (c) of section 263 of the Internal Revenue 

7 Code of 1986 is amended by striking the period at the 

8 end of the third sentence and inserting ‘‘, or to any costs 

9 paid or incurred after December 31, 2010.’’. 

10 SEC. 5. REPEAL OF PERCENTAGE DEPLETION FOR OIL AND 

11 GAS WELLS. 

12 (a) IN GENERAL.—Section 613 of the Internal Rev13 enue Code of 1986 is amended by adding at the end the 

14 following new subsection: 

15 ‘‘(f) TERMINATION OF PERCENTAGE DEPLETION

16 FOR OIL AND GAS PROPERTIES.—In the case of oil and 

17 gas properties, this section shall not apply to any taxable 

18 year beginning after December 31, 2010.’’. 

19 (b) LIMITATIONS ON PERCENTAGE DEPLETION IN

20 CASE OF OIL AND GAS WELLS.—Section 613A of the In21 ternal Revenue Code of 1986 is amended by adding at the 

22 end the following new subsection: 

23 ‘‘(f) TERMINATION.—This section shall not apply to 

24 any taxable year beginning after December 31, 2010.’’. 


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1 SEC. 6. DENIAL OF DEDUCTION FOR INCOME ATTRIB2 UTABLE TO DOMESTIC PRODUCTION OF OIL, 

3 NATURAL GAS, OR PRIMARY PRODUCTS 

4 THEREOF. 

5 (a) IN GENERAL.—Subparagraph (B) of section 

6 199(c)(4) of the Internal Revenue Code of 1986 is amend7 ed by striking ‘‘or’’ at the end of clause (ii), by striking 

8 the period at the end of clause (iii) and inserting ‘‘, or’’, 

9 and by inserting after clause (iii) the following new clause: 

10 ‘‘(iv) the production, refining, proc11 essing, transportation, or distribution of 

12 oil, natural gas, or any primary product 

13 thereof.’’. 

14 (b) PRIMARY PRODUCT.—Section 199(c)(4)(B) of the 

15 Internal Revenue Code of 1986 is amended by adding at 

16 the end the following flush sentence: 

17 ‘‘For purposes of clause (iv), the term ‘primary 

18 product’ has the same meaning as when used in 

19 section 927(a)(2)(C), as in effect before its re20 peal.’’. 

21 (c) CONFORMING AMENDMENTS.— 

22 (1) Section 199(c)(4) of the Internal Revenue 

23 Code of 1986 is amended— 

24 (A) in subparagraph (A)(i)(III) by striking 

25 ‘‘electricity, natural gas,’’ and inserting ‘‘elec26 tricity’’, and 


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1 (B) in subparagraph (B)(ii) by striking 

2 ‘‘electricity, natural gas,’’ and inserting ‘‘elec3 tricity’’. 

4 (2) Section 199(d) of such Code is amended by 

5 striking paragraph (9) and by redesignating para6 graph (10) as paragraph (9). 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to taxable years beginning after 

9 December 31, 2010. 

Æ 


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