Energy Policy Modernization Act of 2015

Floor Speech

BREAK IN TRANSCRIPT

Mr. LEAHY. Mr. President, the U.S. Senate is currently considering sweeping legislation to modernize the Nation's energy sector. Despite its laudable goals, it leaves one area unaddressed. The bill does nothing to stop corporate bad actors, including those in the energy sector, from simply writing off their egregious misconduct as a cost of doing business. Today I am submitting a commonsense amendment to close a tax loophole that forces hard-working Americans to subsidize corporate wrongdoing.

Under current law, a corporation can deduct the cost of court-ordered punitive damages as an ``ordinary'' business expense. For the victims who have already paid the price for extreme corporate misconduct, there is nothing ``ordinary'' about this at all. It is simply wrong. It offends our most basic notions of justice and fair play. Punitive damage awards are designed to punish wrongdoers for the reprehensible harm that they cause and to deter would-be bad actors from repeating similar mistakes. Today a company can simply hire a team of lawyers and accountants to deduct this punishment from the taxes the company owes. My amendment would end this offensive practice with a simple fix to our Tax Code.

Let us not forget that our energy sector has been plagued with companies that have recklessly destroyed environments and harmed communities with impunity. In 1994, a jury awarded $5 billion in punitive damages against Exxon for the Valdez spill in Alaska. This oil spill devastated an entire region, the livelihoods of its people, and a way of life. After Exxon paid white-shoe law firms to fight these damages in the courts for 14 years, it successfully brought its damages down to $500 million. Then, adding insult to injury, Exxon used the Federal Tax Code to write off its punitive damages as nothing more than an ``ordinary'' business expense.

In 2010, the Deepwater Horizon drilling rig exploded, and 11 Americans were killed in the worst oil spill in American history. That same year, an explosion in the Upper Big Branch Mine in West Virginia claimed the lives of 29 miners. If forced to pay punitive damages for their misconduct, these companies could also write off that expense.

The Obama administration has requested eliminating this tax deduction in its budget proposals. Our very own Joint Committee on Taxation has estimated that closing this loophole would save taxpayers more than $400 million over 10 years. If we don't change the law, our deficit will grow by nearly half a billion dollars because we allowed taxpayers to subsidize the worst corporate actors. By failing to act, we are sending the message that pillaging our environment is an encouraged, tax-deductible behavior. This amendment makes fiscal sense, and it is common sense.

Vermonters and Americans are tired of seeing giant corporations getting special treatment under the law--and paying for their reckless mistakes. It should shock the conscience to know that current law compels taxpayers to effectively subsidize the malfeasance of the worst corporate actors. My amendment would change this unacceptable status quo. I urge Senators to support my amendment.

BREAK IN TRANSCRIPT

Source