Rep. Al Ullman (D-Ore.), chairman of the House Ways and Means Committee, formally outlined yesterday a proposal for stiffening President Carter's "windfall profits" tax on oil, with a plan to finish work on the measure late next week.
Although Ullman did not win an outright majority for his plan, which was unveiled at a caucus of panel Democrats, several key members said it was likely the proposal would receive broad support during drafting sessions.
Disclosure of the plan came after Ullman removed the last major stumbling block to the "windfall" hearings by pledging to committee liberals he will take up the foreign tax credit issue immediately after the Carter bill is approved.
The liberals had threatened to block the "windfall profits" tax legislation unless the foreign tax credit issue were considered. They want to tighten foreign tax credits now allowed oil companies that operate overseas.
The Ullman proposal, along with a longer-range plan for speedy consideration of the Carter tax measure in Congress, will be discussed at a breakfast meeting today between House and Senate leaders and key congressional tax-writers.
Attending along with Ullman will be Senate Majority Leader Robert C. Byrd (D-W.Va.), House Speaker Thomas P. (Tip) O'Neill (D-Mass.) and Sen. Russell B. Long (D-La.), chairman of the Senate Finance Committee.
Ullman's action yesterday appeared to pave the way for the start of the committee's formal drafting session on the Carter "windfall profits" tax proposal, which is scheduled to begin this morning.
Carter wants quick passage of the "windfall profits" tax legislation so as not to lose momentum for the plan. The proposal is a companion piece to the president's decision to lift controls on oil prices - a move which began this week.
The Ullman proposal for stiffening the Carter plan involves these elements:
Carter's proposed tax rate of 50 percent on the portion of the "windfall profits" that would be subject to the new tax would be raised to 60 percent for most categories of oil.
The 50 percent rate would be retained, however, for oil selling for below $20 a barrel in one of these three categories: newly discovered oil, tertiary oil and stripper-well oil.
The portion of the tax that applies to "old" oil - essentially that oil discovered before 1972 - would be phased out more slowly than Carter proposed, with the tax finally disappearing in July 1984 rather than May 1983.
Ullman would extend the tax to Alaskan oil from existing wells, but only on the portion of increased oil company revenues that stems from the price of oil, not on transportation costs. Carter would exempt Alaskan oil entirely.
So-called "marginal" wells - deep wells that are difficult to exploit - would be taxed at the stiffer "old" oil rate rather than as "new" oil, as the Carter plan would require.
Estimates by the congressional Joint Committee on Taxation show the Ullman plan would boost the amount of new revenues the tax would bring the Treasury to $6.6 billion by 1982, compared to $4.9 billion for Carter's proposal.
The estimate for Carter's plan was revised upward from $3.4 billion, which the committee calculated last week - largely because staffers decided to compute the figures based on a more realistic $18-a-barrel oil price.
The committee's previous estimate had been based on the assumption that oil prices would rise to $17.50 a barrel after adjustment for inflation. Carter's original estimates, based on a $16-a-barrel price, showed a gain of $1.7 billion.
Despite the generally favorable reception given the Ullman plan yesterday, the "windfall profits" tax faces some hurdles this week and next as both liberals and conservatives try to amend it to their liking.
Republicans and oil-state Democrats are expected to try to exempt new oil-company revenues that stem from price increases ordered by the oil-producing nations - a portion of the tax the administration considers most important.
At the same time, liberals are preparing to propose several plans to tighten the Carter plan far more than Ullman has suggested. Rep. William Cotter (D-Conn.) is backing a rival proposal that would raise $10 billion.
Although the liberals won a victory yesterday in Ullman's committee to take up the foreign tax credit issue right after the windfall tax plan, it's still far from certain that they'll be able to push through major changes.
Both Ullman and the Treasury oppose any significant alterations in the current foreign tax credit tax. The credit is designed to prevent U.S. firms from paying "double" taxes on their earnings, abroad and here at home.