I'd like to suggest that a tax on assets at the time of transfer of ownership would be more difficult for stockholders and other wealthholders to pass on to others. It also addresses the question so dear to the heart of conservatives of the "disincentive" effect of taxing assets--how adversely affected would the "animal spirits" of the "entrepreneur" be by the knowledge that whomever s/he transferred his/ her wealth to would be subject to a tax? It is true that to raise an amount close to that of an asset tax, the rate would be much higher--I could see giving some credit to the families affected e.g. the Rockefellers could have their name linked to scholarships for minority students, to job training programs for the poor, etc. Marianne [EMAIL PROTECTED] ------------------------------ From: Nathan Newman <[EMAIL PROTECTED]> Mon, 1 May 1995 14:24:15 -0700 Subject: Government's Slick Deal for Oil Industry (fwd) ---------- Forwarded message ---------- Date: Mon, 1 May 1995 11:52:35 -0400 From: Janice Shields <[EMAIL PROTECTED]> Subject: Government's Slick Deal for Oil Industry C O R P O R A T E W E L F A R E -- Policy Notes May 1, 1995 REPORT ANNOUNCEMENT The Project on Government Oversight (POGO) has released this report: DEPARTMENT OF INTERIOR LOOKS THE OTHER WAY: THE GOVERNMENT'S SLICK DEAL FOR THE OIL INDUSTRY POGO has compiled substantial evidence that indicates the federal government is owed more than 1.5 billion dollars in uncollected royalties, interest and penalties from seven of the largest oil companies -- Texaco, Shell, Mobil, ARCO, Chevron, Exxon and Unocal -- for their production of crude oil from federal lands in California. POGO has also obtained a draft Department of Interior (DOI) Inspector General report that concludes that over a four year period, royalties alone "may have been underpaid by as much as $29.5 million from 1990 through 1993 and may continue to be underpaid as long as pipelines continue to operate as private carriers." Crude oil is produced on federal lands by both "integrated" and independent producers. The seven companies identified are "integrated" -- which means they produce crude, in all but one case (Exxon) they own the pipelines that transport the crude to the refineries, and they own the refineries themselves. The only way for any oil producer to transport the crude to refineries efficiently is through the intrastate pipelines owned by these integrated oil companies. For decades, these companies have artificially depressed the price of crude oil, though their refined product prices are comparable to those in the rest of the nation. As a result, it makes economic sense for the integrated companies to push their profits downstream to the refinery end. This way the integrated companies squeeze out competition from the independent producers and refiners, and pay the government less in royalties, as royalties are based on the price of the crude oil. The June 1994 language accompanying the congressional appropriation for DOI's FY-95 budget required DOI to come up with a plan "for recovering royalties and interest from supposed undervaluations" when submitting the DOI FY-96 budget request in April 1995. The House Report language concludes, "every effort should be made to act as quickly as possible on this issue to avoid further losses due to the Statute of Limitations." After a year, the only action the DOI has taken is to take another six months to prepare to audit two California companies for three selected years. DOI, the agency responsible for collecting these royalties, is a willing partner in this corporate welfare program. In addition to the forthcoming Inspector General report, DOI has ignored the following: The U.S. Department of Commerce -- "It seems that all we have seen to this point clearly establishes that there is a problem. . . MMS (DOI's Mineral Management Service) needs to do something now to avoid creating the impression that these events have not occurred!" The U.S. DOI Office of Policy Analysis -- "I suggest that the Department proceed immediately to ascertain the amount of additional royalties due, including interest and criminal penalties, if any, and initiate collection procedures." The U.S. DOI Minerals Management Service (MMS) -- "We have evidence that the major California oil producers may have undervalued California oil production by keeping posted prices low and thus underpaying the royalties based on them. . . The various available court documents, out-of-court settlements, discussions with attorneys, and the work of consultants lead us to conclude that we should pursue potential Federal royalty underpayments." These oil companies have already settled for over $350 million with the State of California for royalties owed to the State for the same reasons money is owed to the Federal Treasury. However, all the evidence used by the State to retrieve this money has been sealed by the courts at the request of the oil companies who feared "potentially prejudicial pretrial publicity." Despite all of the evidence, the Department of Interior is still looking for excuses not to collect the money from these big oil corporations. The DOI's attitude is revealed by an official in an internal memo writing he is, "hoping for some sort of 'motherhood' statement I can give the team -- I have stalled this issue long enough." DOI has even gone so far as to mislead Senator Dale Bumpers (D-AR). In one example, MMS assured the Senator that when they recently waived the government's right to collect royalties from Exxon, DOI did so with the State of California's approval. Yet the State's attorney wrote in a scathing letter, ". . . representatives from MMS and the Solicitor's office have indicated to others that Interior. . . is justifying this approach based on the approval of that language by (California). If such representations are indeed being made, they are simply false." The misleading DOI memo was sent to Senator Bumpers mid-November, 1994 even though an internal briefing paper prepared for Secretary Babbitt by MMS dated one month earlier -- October 16 -- admitted "Certain State officials recently contacted DOI, asserting that they do not wish MMS to use the same language in settlements now pending." The Bureau of Land Management (BLM) has also asked DOI's Office of the Solicitor for a legal ruling as to BLM's ability to enforce common carrier requirements in California. The December 1994 draft Inspector General report states that, "On June 7, 1991, the Bureau (BLM) requested an opinion from the Solicitor to clarify the Bureau's specific authorities under the Act. However, a member of the Solicitor's office said that the opinion had not been issued because of other priorities within the office." The Department of Interior must produce clearer regulations and enforce the Mineral Leasing Act's provision requiring pipelines crossing federal lands to be operated as common carriers. This would begin to create a more open market for crude oil, where prices would more closely reflect value. In itself, however, this change is not enough. The 1988 regulations regarding the collection of royalties (30 CFR Chap. 206 Sec. 101-102) are currently subject to interpretation. In order to avoid future adverse interpretations, these regulations should include at least two new provisions. The first provision should allow MMS to cross-check and challenge prices posted or paid to ensure that those prices comport with the market value of crude. The second should provide that all documents in the possession of the oil companies regarding prices should be available to government auditors. Currently, government auditors do not have full access. Perhaps the most important, although the most difficult, change will be to convince the Department of Interior to reverse its mind-set from trying to find reasons not to collect money from the big oil companies, to trying, instead, to figure out how to retrieve this windfall for the American people. The White House and Secretary Babbitt have recently recommended eliminating MMS -- the office that has failed to collect this money. The proposal is to turn the responsibility of collecting royalties due the federal government over to the States and to the Native American Tribes instead. Perhaps this change would be a step in the right direction. Recovering the $1.5 billion is equivalent to 1/3 of all President Clinton's proposed budget savings for FY 1996 -- and would not require any cuts of programs or any tax increases. Reports are $20.00 Please Make Checks Payable to: The Project on Government Oversight 2025 Eye Stree, NW, Suite 1117 Washington,DC 20006-1903 (202)466-5339 Fax (202)466-5596 _______________________________________________________________________ To Subscribe to CORPORATE-WELFARE: Send email to [EMAIL PROTECTED] with " subscribe corporate-welfare firstname lastname " in the body of the message. The CORPORATE-WELFARE list is a project of Essential Information (EI). EI is involved in a variety of projects to encourage citizens to become active and engaged in their communities. We provide provocative information to the public on important topics neglected by the mass media and policymakers. EI was founded by Ralph Nader in 1982. Janice Shields Center For Study of Responsive Law PO Box 19405 Washington, DC 20036 (202)387-8030 [EMAIL PROTECTED] ----- forwarded message ends here -----