I 

108TH CONGRESS 

1ST SESSION H. R. 585

To amend the Internal Revenue Code of 1986 to impose a windfall profit 

tax on crude oil and products thereof. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 5, 2003

Mr. KUCINICH introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to impose 

a windfall profit tax on crude oil and products thereof.

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 ‘‘National Defense Oil 

5 Equity Act of 2003’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 

8 (1) Iraq has 112 billion barrels of proven oil re9 serves along with roughly 220 billion barrels of prob10 able resources. Only Saudi Arabia’s oil reserves are 
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1 larger. By far, the majority of petroleum reserves 

2 (67%) are found in the Middle East. 

3 (2) The United States has 21 billion barrels of 

4 proven oil reserves, twelfth highest in the world. 

5 United States proven oil reserves have declined by 

6 almost 20% since 1990. 

7 (3) The United States consumes 25% of the 

8 world’s oil supply, the largest share; yet it holds only 

9 2.2 percent of the world’s proven oil reserves. 

10 (4) Numerous foreign oil companies have pre11 liminary contracts to spend billions of dollars devel12 oping Iraqi oil fields. These companies originate 

13 from Algeria, Australia, Britain, Canada, China, 

14 France, India, Indonesia, Italy, Japan, Malaysia, 

15 Netherlands, Russia, Spain, Turkey, and Vietnam. 

16 (5) According to several news accounts, the Ad17 ministration is conferring with energy experts, in18 dustry executives, and Iraqi opposition leaders on 

19 how to revive and expand Iraq’s oil fields after an 

20 invasion. 

21 (6) United States Special Forces have been on 

22 the ground inside Iraq since September of 2002 to 

23 monitor the oil fields and rigs. 
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1 (7) During the first war in Iraq, oil prices rose 

2 to $41 per barrel, gasoline prices hit record levels, 

3 and oil companies made record profits. 

4 (8) According to Goldman Sachs, crude oil 

5 prices could reach $45 per barrel as a result of a 

6 war in Iraq. The price of oil has already increased 

7 $12 per barrel in the last year to $33 per barrel. 

8 SEC. 3. WINDFALL PROFITS TAX. 

9 (a) IN GENERAL.—Subtitle E of the Internal Rev10 enue Code of 1986 (relating to alcohol, tobacco, and cer11 tain other excise taxes) is amended by adding at the end 

12 thereof the following new chapter: 

13 ‘‘CHAPTER 55—WINDFALL PROFIT ON 

14 CRUDE OIL AND PRODUCTS THEREOF

‘‘Sec. 5886. Imposition of tax.

15 ‘‘SEC. 5886. IMPOSITION OF TAX. 

16 ‘‘(a) IN GENERAL.—In addition to any other tax im17 posed under this title, there is hereby imposed an excise 

18 tax on the sale in the United States of any crude oil or 

19 other taxable product a tax equal to the applicable per20 centage of the windfall profit on such sale. 

21 ‘‘(b) DEFINITIONS.—For purposes of this section—

22 ‘‘(1) TAXABLE PRODUCT.—The term ‘taxable 

23 product’ means any fuel which is a product of crude 

24 oil. 
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1 ‘‘(2) WINDFALL PROFIT.—The term ‘windfall 

2 profit’ means, with respect to any sale, so much of 

3 the profit on such sale as exceeds a reasonable prof4 it. 

5 ‘‘(3) APPLICABLE PERCENTAGE.—The term 

6 ‘applicable percentage’ means—

7 ‘‘(A) 50 percent to the extent that the 

8 profit on the sale exceeds 100 percent of the 

9 reasonable profit on the sale but does not ex10 ceed 102 percent of the reasonable profit on the 

11 sale, 

12 ‘‘(B) 75 percent to the extent that the 

13 profit on the sale exceeds 102 percent of the 

14 reasonable profit on the sale but does not ex15 ceed 105 percent of the reasonable profit on the 

16 sale, and 

17 ‘‘(C) 100 percent to the extent that the 

18 profit on the sale exceeds 105 percent of the 

19 reasonable profit on the sale. 

20 ‘‘(4) REASONABLE PROFIT.—The term ‘reason21 able profit’ means the amount determined by the 

22 Reasonable Profits Board to be a reasonable profit 

23 on the sale. 

24 ‘‘(c) LIABILITY FOR PAYMENT OF TAX.—The taxes 

25 imposed by subsection (a) shall be paid by the seller. 
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1 ‘‘(d) APPLICATION OF SECTION.—This section shall 

2 apply during the period beginning on the date of the en3 actment of this section and ending on the date that the 

4 President certifies to the Congress than no members of 

5 the Armed Forces of the United States are in Iraq.’’

6 (b) REASONABLE PROFITS BOARD.—

7 (1) ESTABLISHMENT.—There is established an 

8 independent board to be known as the ‘‘Reasonable 

9 Profits Board’’ (hereafter in this subsection referred 

10 to as the ‘‘Board’’). 

11 (2) DUTIES.—The Board shall make reasonable 

12 profit determinations for purposes of applying sec13 tion 5886 of the Internal Revenue Code of 1986 (re14 lating to windfall profit on crude oil, natural gas, 

15 and products thereof). 

16 (3) ADVISORY COMMITTEE.—The Board shall 

17 be considered an advisory committee within the 

18 meaning of the Federal Advisory Committee Act (5 

19 U.S.C. App.). 

20 (4) APPOINTMENT.—

21 (A) MEMBERS.—The Board shall be com22 posed of 3 members appointed by the President 

23 of the United States. 

24 (B) TERM.—Members of the Board shall 

25 be appointed for a term of 3 years.
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1 (C) BACKGROUND.—The members shall 

2 have no financial interests in any of the busi3 nesses for which reasonable profits are deter4 mined by the Board. 

5 (5) PAY AND TRAVEL EXPENSES.—

6 (A) PAY.—Notwithstanding section 7 of 

7 the Federal Advisory Committee Act (5 U.S.C. 

8 App.), members of the Board shall be paid at 

9 a rate equal to the daily equivalent of the min10 imum annual rate of basic pay for level IV of 

11 the Executive Schedule under section 5315 of 

12 title 5, United States Code, for each day (in13 cluding travel time) during which the member is 

14 engaged in the actual performance of duties 

15 vested in the Board. 

16 (B) TRAVEL EXPENSES.—Members shall 

17 receive travel expenses, including per diem in 

18 lieu of subsistence, in accordance with section 

19 5702 and 5703 of title 5, United States Code. 

20 (6) DIRECTOR OF STAFF.—

21 (A) QUALIFICATIONS.—The Board shall 

22 appoint a Director who has no financial inter23 ests in any of the businesses for which reason24 able profits are determined by the Board. 
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1 (B) PAY.—Notwithstanding section 7 of 

2 the Federal Advisory Committee Act (5 U.S.C. 

3 App.), the Director shall be paid at the rate of 

4 basic pay payable for level IV of the Executive 

5 Schedule under section 5315 of title 5, United 

6 States Code. 

7 (7) STAFF.—

8 (A) ADDITIONAL PERSONNEL.—The Direc9 tor, with the approval of the Board, may ap10 point and fix the pay of additional personnel. 

11 (B) APPOINTMENTS.—The Director may 

12 make such appointments without regard to the 

13 provisions of title 5, United States Code, gov14 erning appointments in the competitive service, 

15 and any personnel so appointed may be paid 

16 without regard to the provisions of chapter 51 

17 and subchapter III of chapter 53 of that title 

18 relating to classification and General Schedule 

19 pay rates. 

20 (C) DETAILEES.—Upon the request of the 

21 Director, the head of any Federal department 

22 or agency may detail any of the personnel of 

23 that department or agency to the Board to as24 sist the Board in accordance with an agreement 

25 entered into with the Board. 
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1 (D) ASSISTANCE.—The Comptroller Gen2 eral of the United States may provide assist3 ance, including the detailing of employees, to 

4 the Board in accordance with an agreement en5 tered into with the Board. 

6 (8) OTHER AUTHORITY.—

7 (A) EXPERTS AND CONSULTANTS.—The 

8 Board may procure by contract, to the extent 

9 funds are available, the temporary or intermit10 tent services of experts or consultants pursuant 

11 to section 3109 of title 5, United States Code. 

12 (B) LEASING.—The Board may lease 

13 space and acquire personal property to the ex14 tent that funds are available. 

15 (9) FUNDING.—There are authorized to be ap16 propriated such funds as are necessary to carry out 

17 this subsection. 

18 (c) CLERICAL AMENDMENT.—The table of chapters 

19 for subtitle E of such Code is amended by adding at the 

20 end the following new item:

‘‘Chapter 55. Windfall profit on crude oil and refined petroleum 

products.’’

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

22 this section shall take effect on the date of the enactment 

23 of this Act.

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