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1 Federal Tax Policy Memo 1 (1977)

handle is hein.tera/fetxcyemo0001 and id is 1 raw text is: Federal Tax Policy Memo August 12, 1977 ENERGY BILL CLEARS HOUSE BUDGET A4D ECONOMIC IMPACT OMINOUS With dispatch that surprised most all Congress watchers, the Administra- tion's multi-billion dollar energy program (H.R. 8444) has moved through the House. The key vote on a motion to recommit the measure's centerpiece -- the crude oil equalization tax -- was carried by the bill's proponents by 16 votes. Although there were close votes on several other provisions, House Majority Leader Tip O'Neill apparently was assured of eventual success. Hearings have already started at the Senate Finance Committee, and Chairman Russell Long has projected floor action on the bill by late September. The Senate will probe for soft spots, trying to put its own stamp on energy legis- lation. But if the Senate does not make drastic changes -- and hold them in conference committee -- H.R. 8444 probably will be enacted into law by mid- October as the Carter Administration's first major legislative accomplishment. The House did accept most of the Administration's principal proposals -- with the notable exception of the standby gasoline tax. In its present form the bill would: 1. Levy an excise tax on first purchases of crude oil and natural gas liquids to raise the domestic controlled price to the level of world prices. Tax payments would be rebated to income taxpayers, social security and welfare recipients on a per capita basis for calendar 1978. 2. Set price ceilings for all natural gas. 3. Tax gas guzzler cars starting in the 1979 model year. 4. Tax business and utility use of oil and natural gas, with an alternative rebate or investment credit for those who convert to other fuels, prin- cipally coal. 5. Repeal the Federal income tax deduction for state and local gasoline taxes. 6. Allow incentive tax credits for business and personal installation of insulation and solar or wind energy equipment. 7. Require involvement of public utilities in home insulation services and set up a Federal grant program for low-income families to install insula- tion. 8. Put the FPC squarely in the electric utility rate setting business. H.R. 8444 deeply enmeshes the Federal Government in the energy and trans- portation marketplaces with a myriad of new taxing, subsidy, and regulatory programs. As Tip O'Neill collects encomiums from all quarters for his manage- ment of the bill's swift progress through the House, some are now looking in awe at the potential costs and complexities. BUDGET IMPACT The table on page 2 summarizes the estimated revenue impact of the tax provisions of H.R. 8444 through 1985.

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