Senate defeats Nelson plan to limit Big Oil tax break

The Senate on Tuesday defeated an attempt by Sen. Bill Nelson (D-Fla.) to strip access to a manufacturing tax credit for the five biggest U.S. oil and gas companies — possibly the only action the chamber will take on the issue of industry tax incentives before the November elections.
 
Nelson offered an amendment to a small-business incentive package that failed, 56-42, to get the 60 votes necessary to invoke cloture.

{mosads}The amendment would have provided certain small-business relief and paid for it by removing the section 199 manufacturing tax credit for the five largest oil-and-gas companies (those with more than $1 billion of before-tax income). The five major oil companies, including BP, had a combined profit of $25 billion in the first quarter of 2010.

Section 199 of the tax code allows corporations to deduct 6 percent of their income from oil and gas production from their tax liability.
 
Scaling back this incentive has become a common revenue raiser as the White House and congressional Democratic leaders seek to pay for various spending, including President Obama’s proposed $50 billion hike in infrastructure investment.
 
But industry and business groups have attacked the effort as hurting job growth during a weakened economy.
 
The American Petroleum Institute made the defeat of Nelson’s amendment a priority.
 
The group sent a letter Sept. 10 to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) saying the amendment would kill oil-and-gas industry jobs and “discourage investment in new domestic energy projects by an industry that now supports more than 9.2 million American jobs. That would depress growth in new jobs, reduce oil and natural gas revenues to our government, and increase reliance on foreign sources of energy.”
 
Nelson — in a recent op-ed — argued the 2004 manufacturing tax credit “was aimed at manufacturers” but, as written, “big oil producers have been able to benefit … The last thing we should be doing is transferring public tax dollars to the pockets of BP and other major oil producers that continue to rake in exorbitant profits because of high prices at the pump.”