Senate to debate bill killing oil industry tax breaks

The Senate voted Monday to debate a Democratic bill to kill several tax breaks taken by the five largest oil companies and use some of the proceeds to extend expiring energy tax provisions like tax breaks for renewable energy, electric cars and energy efficient homes.

The legislation cleared a procedural hurdle on a deceptively large 92-4 vote. Republicans are permitting it to advance for now in hopes of offering GOP energy ideas, but they are likely to kill it later in the week if Democrats don't permit votes of GOP amendments.

"We're going to use this opportunity to explain how out of touch Democrats are on high gas prices, and put a spotlight on the commonsense ideas Republicans have been urging for years," said GOP leader Mitch McConnell of Kentucky.

Democrats say the big oil companies no longer need longstanding tax breaks to promote exploration or other incentives to boost production when oil prices are well above $100 a barrel.

Republicans say the measure would raise taxes on oil producers but do nothing to lower the cost of gasoline.

The vote on energy taxes came after Senate Democrats signaled they want to move soon to a $26 billion temporary tax cut for businesses to boost their payrolls and encourage investment in new equipment.

Top Democrats unveiled legislation would award businesses a tax credit of 10 percent on the salaries of new hires or for pay raises given to existing workers. Businesses that make major new capital investments in new equipment and machinery would be able to write off those investments immediately rather than over several years.

The idea is to both boost hiring and investment as the fragile economic recovery continues to take hold. The tax cuts would be temporary and apply to 2012 wages and investments.

The Democratic proposal comes a few days after House Majority Leader Eric Cantor, R-Va., proposed a $46 billion, one-year tax cut for smaller businesses. The GOP measure would allow businesses with fewer than 500 employees -- or 99.9 percent of the nation's companies -- to deduct 20 percent of their income from their federal tax bill.

Democrats said their idea was better because it's focused on creating jobs.

Neither the Republican nor Democratic ideas would be "paid for" with spending cuts or revenues gleaned elsewhere from the tax code.