WASHINGTON — Will Californians get $100 a month in gasoline rebates from Washington in addition to the gas relief money state officials want to send to consumers?
Congress is considering a federal gasoline stimulus payment of $100 per month per person and $100 for each dependent. The money would go to most people in areas where national average gasoline prices are more than $4 a gallon.
Those areas would include California, where the Friday average was $5.90 a gallon, by far the nation’s highest state price.
Rep. Mike Thompson, D-Calif., is one of the effort’s leaders. His plan would follow the same guidelines as last year’s federal economic stimulus payments.
That means single tax filers earning less than $75,000 could get the $100. It would be phased out for those earning up to $80,000.
Joint filers could qualify if they earned less than $150,000. The benefit would then be phased out at $160,000.
Qualifying Californians could receive both a state and federal payment.
Thompson chairs the tax-writing House Ways & Means Committee’s select revenue subcommittee, which gives him clout he can use to write the legislation.
He does have to overcome some hurdles.
The biggest is where the money for the payments comes from. Thompson hasn’t come up with a plan to pay for the rebates yet, and does not know the cost.
“We looked at a couple different ideas. We decided it’s important to get the bill in,” he said, while looking at different alternative ways to pay for the plan.
Settling on those ways could be difficult.
Sen. Alex Padilla, D-Calif., is among those pushing the Big Oil Windfall Profits Tax Act. It would require large oil companies that produce or import at least 300,000 barrels of oil per day to pay a per-barrel tax equal to 50% of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel.
The money from the profits would be sent to qualifying consumers as a quarterly rebate. Income limits would be the same as those proposed by Thompson.
The senators figure that if the price of oil was $120 a barrel, the tax would raise about $45 billion per year, which would mean single filers would get about $240 each year and joint filers would get about $360.
The price of crude oil topped $120 earlier this month and recently has been roughly $110 to $115 a barrel.
The government imposed a windfall profits tax on big oil in 1980, and a 2006 Congressional Research Service report found that a new tax “could have several adverse economic effects,” including reducing domestic oil production.
Thompson is considering other ideas, such as imposing higher tariffs on countries that are not going along with the sanctions on Russia imposed by the United States and its allies.
There’s been talk among other lawmakers about suspending the 18.4 cents per gallon federal gasoline tax, but momentum stalled amid concerns that there are no guarantees oil companies and service stations will pass the savings along to consumers.
The rebate idea has stoked interest because it won’t have that problem, though it still generates skepticism.
Alex Muresianu, federal policy analyst at the nonpartisan Tax Foundation, was concerned that the rebate would help sustain price increases.
“It’s pretty clear that inflation is really high and doing another stimulus payment would probably keep pushing that up even further,” he said.
House Transportation and Infrastructure Committee Chairman Peter DeFazio, D-Ore., raised another concern.
“There are a significant number of people who don’t drive. There’s no way to know who does buy gas and who doesn’t buy gas,” he said.
Supporters counter that higher energy prices are reflected in the cost of more than gasoline, as it’s passed through in food, housing and almost any other area where energy is needed. The $100 per month, backers said, could make things easier for people hardest hit by the highest inflation in 40 years.
“People want to get to work. They want to get to the doctor’s office,” said Thompson, explaining why the $100 a month would help.
None of the disagreements appears lethal, though, because, as Rep. Lou Correa, D-Calif., put it: “For my constituents, that’s the No. 1 issue now, gas.”
As a result, said DeFazio, “We all agree we’ve got to do something.”
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