Ohio State House Democrats: Propose New Tax Targeting Big Oil's Riches

COLUMBUS (TDB) -- Seventeen Ohio House Democrats
introduced a bill today that is aimed at pumping some of the enormous and unprecedented profits generated by Big Oil into the state's treasury. The money raised would be used to promote fuel efficiency and a greener economy.

It is not exactly a "windfall profits tax," but would use a formula based on 8.5 percent "multiplied by the amount by which the petroleum business's net income for the petroleum business's taxable year exceeds one million dollars." The bill is clearly an attempt to snare cash on the back of record oil prices.

The handful of oil-industry experts The Daily Bellwether was able to reach said they had no idea how much the proposed tax would generate, nor had they seen the bill. One said, "Sh.t, I have no idea how much it would generate, a lot, Ohio would be rolling in dough."

State Rep. Mike Foley, D-Cleveland, is one of the sponsors and has not yet responded to an e-mail seeking comment. Republicans control the House, and not one has signed on as a cosponsor of the bill. That dims its odds of moving forward and becoming law.

[UPDATE: 7/25/07 -- Got an e-mail from Rep. Foley. "Hi Bill, yes it is on big oil. We exempt retail outlets and the 1st million dollars of profit to go after the largest oil refiners and producers. For example, it you took Exxon's worldwide profits in 2006 of 39 Billion, it is estimated that our tax would bring in about 30 million for Ohio. We would then put this into an advanced alternative energy fund for research, product development, rail travel etc.

Quarterly profits for most of the big oil firms will be announced this Thursday and Friday. OUr assumption is that they will again be huge."]

Big Oil has been making money like never before. Last year, Exxon Mobil earned $75,000 a minute, and posted profits of $39.5 billion. That beat 2005's $36.1 billion profit, a short-lived record for the most money ever made by an American business.

Motorists are smarting under $3 a gallon gasoline prices. There are some who want to punish the oil companies for gouging, although the cost of gasoline, when adjusted for inflation, is about what it was 20 or 30 years ago. And the U.S. uses some 21 million barrels of oil each day, nearly a fourth of the world's 84-million-barrel-a-day total.

The Ohio Democrats say the proposed tax will help shift the state to a green economy. The bill says it is "for the purpose of promoting energy-efficient modes of transportation and advanced energy production technology . . " The tax would not apply to companies whose only business is selling petroleum products at retail, which means independent gas stations and the like. The measure also forbids companies from jacking up prices to cover the tax.

Several states have been looking at taxing net income, including Pennsylvania, California and Alaska, which wants to shift taxation from production to profits.
The U.S. had a windfall profit tax on oil companies from 1980 to 1988, which brought in $80 billion. That was way less than the projected $393 billion, in part because oil producers moved offshore and cut domestic production. The Congressional Research Service said the tax actually caused less oil to be pumped from American oilfields.

Last year, the Ohio Oil and Gas Association, which represents the state's producers (yes, Ohio produces oil) opposed moves in Congress restore a windfall profits tax as petroleum prices spiked. "It is important for producers to convey the message that local production matters and taxing the industry would only harm domestic production and increase dependency on foreign oil." The industry argues that taxes take away funds that could be put back into exploration and drilling for oil.

There's more news today about oil industry profits, and the news is likely to spur the efforts to tax Big Oil.

Cincy Mayor's Dad: I'll Be Peddling Newspapers On City Hall Steps

CINCINNATI (TDB) -- Just ran into Cincinnati Mayor Mark Mallory's dad at a downtown event, and he told me he is so busted up over the coming demise of the Cincinnati Post PM newspaper that he plans to distribute them on City Hall's steps as a eulogy. William L. Mallory Sr., said he's going to buy a $15 bundle for the newspaper's last day on Dec. 31.

"When I was a boy I used to sell them there. They were 2 or 3 cents apiece back in the early 1940s," Mallory recalled. He said somebody tried to chase him off the steps, but the mayor at the time, James Garfield Stewart, intervened. He said Steward told him to stay on the steps for as long as he wanted. "I never forget what he said," Mallory said.

The mayor's father, now retired, was the Democratic Majority Leader of the Ohio House for years. In all, he served 28 years in the Ohio General Assembly before stepping down in 1994. He founded a downstate political dynasty that includes Mark as mayor, Bill Jr. as a Common Pleas Judge, Dale as a state representative in District 32, and Dwane, who is mulling a run for a seat on the Hamilton County Municipal Court.

Cincinnati lawyer Stan Chesley, who hosted fundraisers for President Bill Clinton at his home, recently co-sponsored a gathering that unoffficially launched Mayor Mallory's reelection bid. Gov. Ted Strickland was in attendance when Chesley said the Mallory clan had succeeded the Tafts as the city's preeminent political family.

Said Chesley: "I can remember when everybody wanted to be a Taft. Now nobody wants to be a Taft. They all want to be a Mallory."

The family patriarch said he loved the Post, which leaned Democratic on its editorial pages. He said he considered it a great journalistic enterprise, and added that he once considered becoming a journalist. Instead, Ohio politics beckoned.

Wal-Mart Has A Big-Name Ohio Lawyer: Otto Beatty III, Dem House Leader's Stepson

CINCINNATI (TDB) -- Otto Beatty III is defending Wal-Mart in a federal lawsuit filed by a Bellefontaine contractor who claims the discount chain owes nearly $1.3 million. Beatty's stepmother, Joyce, is the Democratic leader of the Ohio House of Representatives. Wal-Mart's business practices are frequently a target of the United Food and Commercial Workers Union, which runs a Web site devoted to critiquing the Arkansas-based chain. Democrats generally side with organized labor, and many have spoken out against Wal-Mart for coming up short in the corporate responsibility department.

Over the years, there have been complaints that it squeezes suppliers. In this instance, Wal-Mart says the Ohio contractor is trying to shift responsibility for its own poor performance.

The Dem leader's stepson is a parter at Baker & Hostetler. The lawsuit pending before U.S. District Judge Thomas Rose in Dayton is a breach of contract case involving construction of a supercenter in Springfield. Joyce Beatty has no involvement in the dispute, but some probably would find it interesting that a member of her family has a business relationship with the retailer.

Thomas & Marker, the company in court against Wal-Mart, claims it had a $9.61 million deal as general contractor on the new supercenter. It contends it was required to perform unanticipated rock excavation at the site, which required a change order because costs increased due to the unforeseen circumstances.

"In according with the terms and provisions of the contract documents, Thomas & Marker has requested and attempted to obtain payment for all costs incurred in connection with the rock excavation, but Wal-Mart has refused to pay same. Wal-Mart does not have a contractual basis to deny payment to Thomas & Marker."

The contractor said it relied upon geotechnical reports supplied by Wal-Mart when bidding the job, and the reports were inaccurate. It said Wal-Mart made an offer of about $750,000 -- not enough to cover costs -- but that another "official or employee of Wal-Mart denied knowledge of the offer."

Wal-Mart responded to the lawsuit by saying by asserting it has acted in good faith. Beatty III wrote that the contractor screwed up installation of utility lines for the store. No trial date has been set.