Sen. Bob Menendez, D-NJ, has come up with a solution to skyrocketing pump prices: He wants to suspend the federal tax on gasoline, saving motorists 18.4 cents a gallon.
But there's a catch. Democrats want to raise taxes on the big oil companies by an equal amount - a cost they'd inevitably pass along to the consumer.
The Menendez "gas tax holiday" would reduce the cost of regular gas as well as diesel, but it which would last just 60 days. Still, the move could save consumers $100 million dollars per day for as long as it lasts.
But according to the liberal web site Raw Story: "Democrats say the money will be made up by cutting six billion dollars in tax breaks to oil firms."
If the oil companies pass their new costs along without any carrying charges, it would cancel out all the savings to consumers under the Menendez plan.
If "Big Oil" wants to maintain the same profit margin, however, the companies would have to hike pump prices even further - and the Democrats' plan could actually end up costing motorists.
Worse still, where the Menendez "gas tax holiday" would be temporary, the tax hikes on oil companies would apparently be permanent.
The proposed Democrat tax increases include:
• A change in accounting methods that would increase the oil companies tax liability when prices rise.
• Eliminating the tax break on the larger oil companies for accelerated depreciation of expenses associated with "geological and geophysical expenditures."
• The elimination of royalty relief and other direct spending for oil and gas production incentives.
