II 

110TH CONGRESS 

1ST SESSION S. 103 

To amend the Internal Revenue Code of 1986 to provide that major 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 

JANUARY 4, 2007 

Mr. KERRY (for himself, Mrs. FEINSTEIN, and Mr. WYDEN) 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 major oil and gas companies will not be eligible 

for the effective rate reductions enacted in 2004 for 

domestic manufacturers. 

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 ‘‘Restore a Rational 

5 Tax Rate on Petroleum Production Act of 2007’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds that— 


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•S 103 IS

1 (1) like many other countries, the United States 

2 has long provided export-related benefits under its 

3 tax law, 

4 (2) producers and refiners of oil and natural 

5 gas were specifically denied the benefits of those ex6 port-related tax provisions, 

7 (3) those export-related tax provisions were suc8 cessfully challenged by the European Union as being 

9 inconsistent with our trade agreements, 

10 (4) the Congress responded by repealing the ex11 port-related benefits and enacting a substitute ben12 efit that was an effective rate reduction for United 

13 States manufacturers, 

14 (5) producers and refiners of oil and natural 

15 gas were made eligible for the rate reduction even 

16 though they suffered no detriment from repeal of the 

17 export-related benefits, and 

18 (6) the decision to provide the effective rate re19 duction to producers and refiners of oil and natural 

20 gas has operated as a reverse windfall profits tax, 

21 lowering the tax rate on the windfall profits they are 

22 currently enjoying. 


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1 SEC. 3. 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 (relating 

7 to exceptions) is amended by striking ‘‘or’’ at the end of 

8 clause (ii), by striking the period at the end of clause (iii) 

9 and inserting ‘‘, or’’, and by inserting after clause (iii) the 

10 following new clause: 

11 ‘‘(iv) in the case of any major inte12 grated oil company (as defined in section 

13 167(h)(5)(B)), the production, refining, 

14 processing, transportation, or distribution 

15 of oil, natural gas, or any primary product 

16 thereof during any taxable year described 

17 in section 167(h)(A).’’. 

18 (b) CONFORMING AMENDMENTS.—Section 199(c)(4) 

19 of such Code is amended— 

20 (1) in subparagraph (A)(i)(III) by striking 

21 ‘‘electricity, natural gas,’’ and inserting ‘‘electricity’’, 

22 and 

23 (2) in subparagraph (B)(ii) by striking ‘‘elec24 tricity, natural gas,’’ and inserting ‘‘electricity’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2006. 

Æ 


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