HR-7960-119
Referred to the House Committee on Ways and Means.
Sponsored by Ro Khanna (D-CA)
What it does
This bill would impose a 50% excise tax on large crude oil producers and importers (those extracting or importing more than 300,000 barrels per day) on the amount by which quarterly Brent crude prices exceed the 2025 average price. The tax revenue would go into a new "Protect Consumers from Gas Hikes Fund" and be distributed back to individual taxpayers as a refundable tax credit, with the credit amount phased down for higher-income filers and increased for joint filers.
Who benefits
Individual taxpayers below the income thresholds ($75,000 single, $112,500 head of household, $150,000 joint), who would receive quarterly rebate payments funded by the tax; lower- and middle-income households that spend a larger share of income on gasoline; U.S. territories with mirror tax systems, which would receive offsetting payments. Members of the Armed Forces receive a specific accommodation regarding identification number requirements.
Who is hurt
Large crude oil producers and importers exceeding 300,000 barrels per day, who would owe the new tax on price gains above 2025 levels; their shareholders, who could see reduced after-tax profits; higher-income taxpayers above the phase-out thresholds, who would receive reduced or no rebate; and potentially consumers broadly if producers pass some tax costs through to fuel prices, an effect economists dispute and cannot predict with certainty.
Supporters argue
Supporters argue that large oil companies have posted record profits during periods of high gasoline prices without corresponding increases in production costs, and that a windfall tax tied to price spikes above a 2025 baseline directly returns those gains to consumers who bear the burden of higher pump prices. They contend the rebate mechanism, which phases out for higher earners, targets relief to households most affected by price increases while leaving normal profit margins untaxed.
Opponents argue
Opponents argue that taxing crude oil price increases discourages domestic production and investment in new extraction, potentially reducing supply and raising prices over time rather than lowering them. They contend that similar windfall profits taxes enacted in the 1980s were later found to have reduced domestic oil production by significant margins, and that this measure risks repeating that outcome while adding administrative complexity to the tax code.
Constitutional context
This measure imposes a federal excise tax under Congress's Taxing and Spending Clause authority (Art. I, §8, cl. 1), which requires only that excise taxes be geographically uniform, not apportioned like a direct tax; because it taxes a transaction (extraction/importation) rather than unrealized wealth, it does not raise the realization question left open in Moore v. United States (2024). As a revenue measure, it must originate in the House under the Origination Clause (Art. I, §7, cl. 1), which this bill satisfies since it was introduced there.
Checks and balances
Congress would create the tax and rebate structure by statute, while the Treasury Secretary gains substantial rule-making authority to determine rebate amounts, withholding rules, and possession payments, with courts available to review disputes over tax liability determinations.
Historical precedent
The Crude Oil Windfall Profit Tax Act of 1980 imposed a similar excise tax on oil price increases following price decontrol, and was repealed in 1988 after debate over its effect on domestic production.