Lawmakers are poised to reinstate a decades-old fee on oil imports, though some critics say that would violate President Biden’s pledge not to raise taxes on anyone making less than $400,000.
The proposal, included in a $433 billion tax and climate bill, would reinstate a 16.4 cents-per-barrel tax on crude oil imports and taxes on imported petroleum products. President Biden has tried three times to reinstate the tax but has been unsuccessful thus far, according to a Fox News analysis.
The Washington-based conservative group, Americans for Tax Reform, says the tax "will be paid by consumers in the form of higher gas and energy costs," Bloomberg reported.
Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., announced an agreement last week on legislation boosting taxes on huge corporations and wealthy individuals, bolstering fossil fuels and climate change efforts and curbing pharmaceutical prices. Overall, it would raise $739 billion over 10 years in revenue and spend $433 billion, leaving over $300 billion to modestly reduce federal deficits. But a Penn Wharton analysis found that the bill would probably increase inflation slightly for its first two years, before possibly reducing inflation later.
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The tax on imported oil and petroleum products would seemingly break President Joe Biden’s pledge that tax hikes will affect only those Americans earning $400,000 or more per year. Manchin has said the Democratic package honors that pledge. Taxes on oil and petroleum products are usually passed on to consumers in the form of higher energy prices. Energy prices have already broken records during Biden's presidency, and inflation has hit its highest rate in decades.
Manchin is one of Congress' most conservative and contrarian Democrats. He has spent over a year forcing his party to trim its economic proposals, citing inflation fears starkly, and his compromise with Schumer last week shocked colleagues who'd given up hope that he would agree to such a wide-ranging measure.
Manchin has asserted the bill's imposition of a 15% minimum tax on corporations earning over $1 billion annually is not a tax increase. He says it closes loopholes such companies use to escape paying the current 21% corporate tax.
Republicans mocked that reasoning and said its tax boosts would weaken the economy and kill jobs. They cited a report from Congress' nonpartisan Joint Committee on Taxation that said about half of the corporate minimum tax would hit manufacturing firms.
"So in the middle of a supply chain crisis, Democrats want huge job-killing tax hikes that will disproportionately crush American manufacturing and manufacturing jobs," said Senate Minority Leader Mitch McConnell, R-Ky.
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Schumer said he expected votes to begin this week in the Senate, where Vice President Kamala Harris could cast the tie-breaking vote to assure its passage. The narrowly divided House has left town for an August recess, but Democratic leaders have said they would bring lawmakers back for a vote, perhaps next week.
Fox News' Bryan Preston and The Associated Press contributed to this report.
