HOBOKEN - Speaking across the street from the BP gas station at Park Avenue and 14th Street yesterday, U.S. Sen. Robert Menendez announced proposed legislation that would close tax loopholes for the largest U.S. oil companies.
"The flow of money to the oil companies is like the gusher in the Gulf of Mexico," Menendez said, flanked by Hoboken Mayor Dawn Zimmer and good government advocates. "But we can top-fill these loopholes and shut them down quickly and permanently."
Menendez estimated that the tax changes could save taxpayers $20 billion over 10 years, with at least $750 million of that money going to New Jersey.
"This is just the kind of help we need from Washington," said Adam Sherman, the central New Jersey organizer for New Jersey Citizen Action, a watchdog group.
Menendez said that companies currently can avoid paying royalties for certain oil and gas production in the Gulf of Mexico, and receive tax deductions for some production costs, and can also manipulate rules on foreign taxes in order to avoid paying full corporate taxes in the United States.
The Close Big Oil Tax Loopholes Act, co-sponsored by Sens. Bill Nelson, D-Florida, and Jeff Merkley, D-Oregon, would get rid of the tax breaks for large oil companies while allowing some tax deductions and credits for oil companies with revenues of less than $100 million per year.
Sara Banaszak, a senior economist at the American Petroleum Institute, the main U.S. trade association for the oil and gas industry, shot back at Menendez yesterday, saying the legislation could drive jobs and revenue overseas.
By raising the costs of doing business in the United States, the tax changes could force companies to go elsewhere, reducing the overall tax flow to the government, Banaszak said.
In 2008, the average tax burden for oil companies was 53.2 percent, compared to 32.2 for non-oil companies, she added. "When you look at all the taxes paid by oil and gas, they're certainly paying their fair share," Banaszak said. "Our concern is that lawmakers not act rashly."
Menendez said he chose Hoboken to promote the Tax Loopholes Act because of the city's focus on environmentally friendly technologies and green initiatives.
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