[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3379 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3379

     To amend the Internal Revenue Code of 1986 to impose a tax on 
  transactions in oil futures and options and to deposit the revenues 
               from the tax into the Highway Trust Fund.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 2009

     Mr. DeFazio (for himself, Mr. Oberstar, Mr. George Miller of 
 California, Ms. Slaughter, Mr. Rahall, Mr. Boswell, Mr. Capuano, Mr. 
    Lipinski, Mr. Cummings, Mr. Dicks, Mr. Hinchey, Ms. Hirono, Mr. 
 Thompson of California, Mr. Kildee, Mr. Hare, Mr. Baird, Ms. Kaptur, 
   Mr. Mollohan, Mr. Stark, Mr. Wu, Mr. Costello, Mr. Pascrell, Mr. 
  Filner, Mr. Perriello, Mr. Bishop of New York, Mrs. Napolitano, Ms. 
   Norton, Mr. Larson of Connecticut, and Mr. Olver) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
     To amend the Internal Revenue Code of 1986 to impose a tax on 
  transactions in oil futures and options and to deposit the revenues 
               from the tax into the Highway Trust Fund.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Lowering Oil Price 
Speculation for Infrastructure Dedicated to Economic Development Act of 
2009'' or the ``LOPSIDED Oil Prices Act of 2009''.
    (b) Findings.--Congress finds the following:
            (1) The price of oil has risen and fallen dramatically over 
        the last decade without a clear connection to the laws of 
        supply and demand.
            (2) The price of a barrel of oil predictably stayed beneath 
        $20 a barrel of oil for decades. In the beginning of 1999, the 
        price was under $10 a barrel of oil, but since then the oil 
        market has been plagued by speculation and fluctuated wildly.
            (3) In late 2004, the price of oil exceeded $40 a barrel of 
        oil, up 400 percent in 5 years.
            (4) In late 2007, the price exceeded $80 a barrel of oil, 
        up 800 percent in 8 years.
            (5) Nine months later, the price of oil peaked at $145 per 
        barrel of oil, up 1450 percent in just under 10 years. While 
        demand has risen, it has not to risen at those rates.
            (6) The price of oil collapsed in 2008, but the collapse 
        preceded the greater economic downturn. In January 2009, the 
        price had dropped to just over $30 a barrel of oil.
            (7) The economy continues to slide downward pushing with it 
        oil demand, but illogically the price of oil recently peaked at 
        over $70 a barrel of oil.
            (8) Many economists have attributed this irrational 
        behavior of the oil market to the large increase in speculative 
        trading in oil derivatives. Crude oil is now the world's most 
        actively traded commodity futures contract.
            (9) In 2004, the New York Mercantile Exchange (NYMEX) 
        facilitated 52 million oil futures contracts, and in 2008 NYMEX 
        facilitated 134 million oil futures contracts. Other exchanges 
        have seen similar increases, and there is no accurate measure 
        for over-the-counter trades.
            (10) On June 13, 2009, the finance ministers from G8 
        countries--Canada, France, Germany, Italy, Japan, Russia, 
        Britain and the United States--said ``Excess volatility of 
        commodity prices poses risks to growth.''
            (11) Commodity Futures Trading Commissioner Bart Chilton, 
        said in June 2009, ``Crude oil prices are up 60 percent on the 
        year. Supplies are at a 10-year high, and demand is at a 10-
        year low. You do the math. Why should prices be over $70?''
            (12) Many economists argue that a transaction tax on 
        speculative trading will deter short-term speculation, which 
        will reduce the volatility and price of oil.
            (13) James Tobin, a Nobel Prize winner in economics, stated 
        a security transaction tax ``would automatically penalize 
        short-horizon round trips, while negligibly affecting the 
        incentives for . . . longer-term capital investments.''
            (14) Larry Summers, the current Chairman of the National 
        Economic Council and the top economic adviser President Obama, 
        wrote in 1989 that imposing a securities transaction tax 
        ``would have the beneficial effects of curbing instability 
        introduced by speculation, reducing the diversion of resources 
        into the financial sector of the economy, and lengthening the 
        horizon of corporate managers. The efficiency benefits derived 
        from curbing speculation are likely to exceed any costs or 
        reduced liquidity or increased costs of capital that come from 
        taxing financial transactions more heavily.''
            (15) A well-designed oil transaction tax could reduce the 
        volatility of the oil futures market without harming legitimate 
        hedge traders. Oil prices will then return to accurate price 
        discovery following the supply and demand price curve.
            (16) Since 70 percent of oil consumed in the United States 
        is for transportation, the revenue raised on oil transactions 
        is an ideal additional source of funds for the Highway Trust 
        Fund.

SEC. 2. TAX ON TRANSACTIONS IN OIL FUTURES AND OPTIONS.

    (a) In General.--Chapter 36 of the Internal Revenue Code of 1986 is 
amended by inserting after subchapter B the following new subchapter:

     ``Subchapter C--Tax on Transactions in Oil Futures and Options

``Sec. 4475. Tax on transactions in oil futures and options.

``SEC. 4475. TAX ON TRANSACTIONS IN OIL FUTURES AND OPTIONS.

    ``(a) Imposition of Tax.--
            ``(1) Futures.--There is hereby imposed a tax on each 
        covered transaction in an oil futures contract of 0.2 percent 
        of the value of the futures instruments involved in such 
        transaction.
            ``(2) Options.--There is hereby imposed a tax on each 
        covered transaction in an oil option of 0.5 percent of the 
        premium paid on the option for a futures instruments involved 
        in such transaction.
    ``(b) By Whom Paid.--
            ``(1) In general.--The tax imposed by this section shall be 
        paid by--
                    ``(A) the trading facility on which the transaction 
                occurs, or
                    ``(B) if such transaction does not occur on a 
                trading facility, by the buyer of the transaction.
            ``(2) Withholding if buyer not united states person.--See 
        section 1447 for withholding by seller if buyer is foreign 
        person.
    ``(c) Exception for Commercial Traders.--The tax imposed by this 
section shall not apply to any transaction if--
            ``(1) either party to the transaction is--
                    ``(A) classified by the Commodity Futures Trading 
                Commission as a commercial trader with respect to oil, 
                or
                    ``(B) a financial institution acting on behalf of 
                such a party (but only if the financial institution 
                does not at any time acquire ownership of the 
                security), and
            ``(2) the transaction is a bona fide hedging transactions 
        (within the meaning of section 4a(c) of the Commodity Exchange 
        Act).
    ``(d) Definitions.--For purposes of this section--
            ``(1) In general.--The term `covered transaction' any 
        purchase or sale of an oil futures contract or an oil option 
        if--
                    ``(A) such purchase or sale on a trading facility 
                located in the United States, or
                    ``(B) the purchaser or seller is a United States 
                person.
            ``(2) Futures.--The term `oil futures contract' means any 
        contract of sale of oil for future delivery (within the meaning 
        of the Commodity Exchange Act).
            ``(3) Options.--The term `oil option' means any option on a 
        oil futures transaction.
            ``(4) Trading facility.--The term `trading facility' has 
        the meaning given to such term by the Commodity Exchange Act.
    ``(e) Administration.--The Secretary shall carry out this section 
in consultation with the Commodity Futures Trading Commission.''.
    (b) Withholding.--Subchapter A of chapter 3 of such Code is amended 
by adding at the end the following new section:

``SEC. 1447. WITHHOLDING OF TAX ON TRANSACTIONS IN OIL FUTURES AND 
              OPTIONS.

    ``In the case of any acquisition of an oil futures contract or an 
oil option (as such terms are defined in section 4475) by a foreign 
person, the transferor shall be required to deduct and withhold a tax 
equal to the tax which would be imposed on such acquisition under 
section 4475 if the transferee were a United States person.''.
    (c) Tax Revenues Deposited Into Highway Trust Fund.--Paragraph (1) 
of section 9503(b) of such Code is amended by striking ``and'' at the 
end of subparagraph (D), by striking the period at the end of 
subparagraph (E) and inserting ``, and'', and by inserting after 
subparagraph (E) the following new subparagraph:
                    ``(F) sections 1447 and 4475 (relating to taxes on 
                transactions in oil futures and options).''.
    (d) Clerical Amendments.--
            (1) The table of subchapters for chapter 36 of such Code is 
        amended by inserting after the item relating to subchapter B 
        the following new item:

   ``subchapter c. tax on transactions in oil futures and options.''.

            (2) The table of sections for subchapter A of chapter 3 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 1447. Withholding of tax on transactions in oil futures and 
                            options.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to transactions occurring on or after October 1, 2009.
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