More than a month after he first proposed the idea,
Rep. Pete DeFazio (OR) -- along with 29 fellow Democrats -- has
introduced legislation that would levy a small tax on oil futures
trades in order to close the yawning gap in the federal transportation budget.
Oil traders on the New York Mercantile Exchange. (Photo: HowStuffWorks)DeFazio's
bill would set the tax at 0.2 percent for every oil futures contract
and 0.5 percent for every option on a futures contract, which he has projected would raise nearly $200 billion for transportation over the next six years.
The prospect of reining in the Wild West world of oil speculators, whom lawmakers and heads of state of all stripes have blamed for creating furious spikes in gas prices, is an irresistible one for many members of Congress.
But
DeFazio's bill sets broad exemptions from the tax for businesses that
rely on "commercial" oil futures trades to guard against economic
downturns or oil price fluctuations
Wall Street firms
acting on behalf of those "commercial" traders, which range from oil
companies such as Exxon to major trucking companies, would also be
exempted from DeFazio's proposed tax -- so long as the firms never held
the oil futures for their own profit-making purposes.
It's
unclear how much those exceptions would drive down the value of the
oil-futures tax. DeFazio's bill does answer skeptics who believe taxing
securities transactions could drive business offshore by requiring foreign holders of U.S. oil contracts to deduct and withhold the tax themselves.
The bill's distinction between "commercial" and "non-commercial" oil traders could prove problematic, however, given how murky
the distinction is for some financial analysts. Oil companies and banks
often work both sides of the equation, making trades connected to
legitimate business as well as trades purely to profit from price
swings, making enforcement of the rules potentially difficult.
Further
complicating the issue, the Commodity Futures Trading Commission could
soon pull the rug out from DeFazio's transportation-funding plan by
setting its own limits on Wall Street's speculative trading. Still, his proposal is worth watching in the coming days of fiscal uncertainty for infrastructure.
The full list of DeFazio's House Democratic co-sponsors is available after the jump.
Co-sponsors: Brian
Baird (WA), Tim Bishop (NY), Leonard Boswell (IA), Michael Capuano
(MA), Russ Carnahan (MO), Jerry Costello (IL), Elijah Cummings (MD),
Norm Dicks (WA), Bob FIlner (CA), Phil Hare (IL), Maurice Hinchey (NY),
Mazie Hirono (HI), Marcy Kaptur (OH), Dale Kildee (MI), John Larson
(CT), Dan Lipinski (IL), George Miller (CA), Alan Mollohan (WV), Grace
Napolitano (CA), Eleanor Holmes Norton (DC), Jim Oberstar (MN), John
Olver (MA), Bill Pascrell (NJ), Tom Perriello (VA), Nick Rahall (WV),
Louise Slaughter (NY), Pete Stark (CA), Mike Thompson (CA), David Wu
(OR).
