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.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Emergency Deficit Reduction Act''.

SEC. 2. FINDINGS.

    The Senate finds the following:
            (1) At a time when our Nation has a $14.2 trillion national 
        debt and a $1.6 trillion annual deficit, moving aggressively 
        toward deficit reduction means that we must include not only 
        well-targeted budget cuts, but revenue raised in a fair and 
        economically just way. Questions every Member of Congress 
        should be asking are the following:
                    (A) Do we ask the highest paid executives on Wall 
                Street to give up a $1 million a year tax break, or do 
                we ask senior citizens to go cold in the winter by 
                cutting the Low Income Home Energy Assistance Program?
                    (B) Do we ask Exxon Mobil and other big oil 
                companies to give up their tax breaks, or do we ask 
                over 9 million college students to go further into debt 
                by cutting Pell Grants by $5.7 billion?
                    (C) Do we stop cutting taxes for the richest 400 
                American families, who earned an average of $345 
                million in 2007, or do we delay Social Security 
                benefits to 500,000 Americans by a $1.7 billion cut in 
                the Social Security Administration?
                    (D) Do we establish an emergency deficit reduction 
                surtax on millionaires and billionaires, or do we deny 
                over 200,000 little children the opportunity to enroll 
                in Head Start by cutting this program by $1.1 billion?
                    (E) Do we finally tax hedge fund managers who make 
                at least $1 billion at a higher rate than police 
                officers, teachers, firefighters, and nurses, or will 
                11 million Americans be denied access to quality 
                primary healthcare by a $1.3 billion cut in community 
                health centers?
            (2) At a time when the wealthiest people in this country 
        are doing phenomenally well, when the effective Federal tax 
        rates for the richest Americans are the lowest on record, and 
        when the top 2 percent of taxpayers have received hundreds of 
        billions of dollars in tax breaks in recent years, it would be 
        morally wrong for the United States Congress to move towards a 
        balanced budget on the backs of the middle class, the elderly, 
        the sick, and the most vulnerable people in our society while 
        asking nothing of the highest income earners and most 
        profitable corporations.
            (3) Creating an emergency deficit reduction surtax on 
        income over $1 million will reduce the deficit in a fair and 
        economically just way by increasing revenue from those who can 
        afford it the most.
            (4) From 2000 to 2010, the 5 largest oil companies in the 
        United States made nearly $1 trillion in profits, yet some of 
        them paid nothing in Federal income taxes in recent years. 
        Ending outdated and unnecessary tax credits, deductions, and 
        subsidies for big oil companies is a fair and economically just 
        way to raise revenue and reduce the deficit.
            (5) In the midst of the worst recession since the Great 
        Depression, America's middle class and working families have 
        already paid a very heavy price in terms of lost jobs, lost 
        homes, lost wages, and lost opportunity. The time has come to 
        ask the wealthiest in our society and the most profitable 
        corporations in America to help our Nation address its deficit 
        crisis. Any deficit reduction package must include raising 
        revenue from the wealthy and eliminating tax breaks for big oil 
        companies.

SEC. 3. EMERGENCY DEFICIT REDUCTION SURCHARGE ON HIGH INCOME 
              INDIVIDUALS.

    (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

   ``PART VIII--EMERGENCY DEFICIT REDUCTION SURCHARGE ON HIGH INCOME 
                              INDIVIDUALS

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

``SEC. 59B. EMERGENCY DEFICIT REDUCTION SURCHARGE ON HIGH INCOME 
              INDIVIDUALS.

    ``(a) General Rule.--In the case of a taxpayer other than a 
corporation, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) a tax equal to 5.4 percent of so much of the 
modified adjusted gross income of the taxpayer as exceeds $1,000,000 
($2,000,000 in the case of any taxpayer making a joint return under 
section 6013).
    ``(b) Modified Adjusted Gross Income.--For purposes of this 
section, the term `modified adjusted gross income' means adjusted gross 
income reduced by any deduction (not taken into account in determining 
adjusted gross income) allowed for investment interest (as defined in 
section 163(d)). In the case of an estate or trust, adjusted gross 
income shall be determined as provided in section 67(e).
    ``(c) Special Rules.--
            ``(1) Nonresident alien.--In the case of a nonresident 
        alien individual, only amounts taken into account in connection 
        with the tax imposed under section 871(b) shall be taken into 
        account under this section.
            ``(2) Citizens and residents living abroad.--The dollar 
        amount in effect under subsection (a) shall be decreased by the 
        excess of--
                    ``(A) the amounts excluded from the taxpayer's 
                gross income under section 911, over
                    ``(B) the amounts of any deductions or exclusions 
                disallowed under section 911(d)(6) with respect to the 
                amounts described in subparagraph (A).
            ``(3) Charitable trusts.--Subsection (a) shall not apply to 
        a trust all the unexpired interests in which are devoted to one 
        or more of the purposes described in section 170(c)(2)(B).
            ``(4) Not treated as tax imposed by this chapter for 
        certain purposes.--The tax imposed under this section shall not 
        be treated as tax imposed by this chapter for purposes of 
        determining the amount of any credit under this chapter or for 
        purposes of section 55.''.
    (b) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

   ``part viii. emergency deficit reduction surcharge on high income 
                            individuals.''.

    (c) Section 15 Not To Apply.--The amendment made by subsection (a) 
shall not be treated as a change in a rate of tax for purposes of 
section 15 of the Internal Revenue Code of 1986.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2010.

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

    Subsection (c) of section 263 of the Internal Revenue Code of 1986 
is amended by striking the period at the end of the third sentence and 
inserting ``, or to any costs paid or incurred after December 31, 
2010.''.

SEC. 5. REPEAL OF PERCENTAGE DEPLETION FOR OIL AND GAS WELLS.

    (a) In General.--Section 613 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(f) Termination of Percentage Depletion for Oil and Gas 
Properties.--In the case of oil and gas properties, this section shall 
not apply to any taxable year beginning after December 31, 2010.''.
    (b) Limitations on Percentage Depletion in Case of Oil and Gas 
Wells.--Section 613A of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new subsection:
    ``(f) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2010.''.

SEC. 6. 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 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) Primary Product.--Section 199(c)(4)(B) of the Internal Revenue 
Code of 1986 is amended by adding at the end the following flush 
sentence:
                ``For purposes of clause (iv), the term `primary 
                product' has the same meaning as when used in section 
                927(a)(2)(C), as in effect before its repeal.''.
    (c) Conforming Amendments.--
            (1) Section 199(c)(4) of the Internal Revenue Code of 1986 
        is amended--
                    (A) in subparagraph (A)(i)(III) by striking 
                ``electricity, natural gas,'' and inserting 
                ``electricity'', and
                    (B) in subparagraph (B)(ii) by striking 
                ``electricity, natural gas,'' and inserting 
                ``electricity''.
            (2) Section 199(d) of such Code is amended by striking 
        paragraph (9) and by redesignating paragraph (10) as paragraph 
        (9).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2010.

Summary: Emergency Deficit Reduction Act - Amends the Internal Revenue Code to: (1) impose an additional 5.4% tax on individual taxpayers whose modified adjusted gross income exceeds $1 million ($2 million in the case of a joint return); (2) repeal the amortization of intangible and drilling and development costs for oil, gas, and geothermal wells; (3) repeal the percentage depletion allowance for oil and gas wells; and (4) deny a tax deduction for income attributable to the domestic production of oil, natural gas, or primary products thereof.