SCHUMER HOLDS SYRACUSE PRESS CONFERENCE TO ANNOUNCE CALL FOR THE BREAK-UP OF BIG OIL COMPANIES

             In light of skyrocketing gas prices in the Central New York, U.S. Senator Charles E. Schumer has called for a serious examination of breaking up the big oil companies.  As the top five oil companies report unprecedented profits, Schumer discussed how oil company mergers, particularly those that have consolidated the downstream refining and retail sector, have robbed the market of any power to put a check on prices.  Schumer today announced legislation that would require the Government Accounting Office to look at the impacts of the big oil company mergers since 1990, the impact of undoing them, and the impact of prohibiting vertical integration in the oil industry.

     “As New Yorkers are being tipped upside down at the gas pump, big oil companies are getting tax breaks and subsidies,” Schumer said.  “Competition no longer exists in the oil business and we need to finally get tough to give consumers some quick relief.”

     All over upstate New York, gas prices have been skyrocketing.  For all of upstate New York, the price of a gallon of unleaded gasoline reached hit $3.11 on Friday, up from $2.72 a month ago and $2.40 at this time last year.  This represents a 15 percent jump from a month ago and 30 percent spike over last year.  In Onondaga County, the average price of gas is up to $3.02 from $2.71 a month go. Schumer also called for the IRS to increase its mileage reimbursement formulas, used for self-employed workers; federal, state, and local governments; and frequently adopted by the private sector to reimburse workers for driving while on business.  Schumer’s proposal will increase the mileage cost that people are allowed to deduct when they use their car for charity work – an area already hit hard by the high cost of gas.

     Right now, the Internal Revenue Service sets the mileage rate every year for determining how much of an individual’s travel costs can be deductible.  For 2005, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) has been set at 44, cents a mile for all business miles driven, up from 37.5 cents a mile in 2004; and 14 cents a mile when computing deductible medical, volunteer or moving expenses, up from 14 cents a mile in 2004.

     According to the American Automobile Association in 2006, an average car driven 15,000 miles a year, the true cost was closer to 52.2 cents a mile – and this is estimating that gas cost $2.40 per gallon.  Schumer’s proposal reflects the increase in gas prices and brings consistency to the tax code.  Under the Schumer proposal the 60 cents per mile rate would be set by law for all of 2006 and it would apply to businesses or charitable use, or moving or medical expenses.

     Some of businesses that are hurt the most by rising gas prices are good will organizations that depend on volunteers to drive in order to reach the people they want to help, like Meals on Wheels.  According to Meals on Wheels in Syracuse, their drivers log more than 100,000 miles per year and have to pay for their own gas irrespective of the price.  Roughly 65 percent of Meals on Wheels volunteers are retired and on a fixed income, meaning the spike in gas prices is deterring many seniors from volunteering.  At the same time, demand for meal service has increased nearly 30 percent.

     The increase in the deduction could save Central New York drivers hundreds of dollars per year.  For example, a family that makes a combined taxable income of $60,000 (which would put them in the 25 percent tax bracket) would now be able to deduct 15.5 cents more per mile that they drive for work.  If the family drove 10,000 miles a year, at the current 44.5 cents per mile deduction and a tax rate of 25 percent the family would be able to deduct a total of $1112.50.  With the increase to 60 cents per mile, the family would now be able to deduct $1500 for the year, nearly $370 more.

  While these rates will have the most direct impact on people who are not directly reimbursed by their companies, many businesses use the IRS rate as a standard for mileage reimbursements to employees.  So work will benefit as businesses alter their policies to reflect the new rate.  According to a recent report by the Business Travel Coalition, 78 percent of corporations, universities, and government entities surveyed establish their reimbursement rate based on the IRS formula.  Ninety-three percent of those surveyed had not increased their rate in light of the high-gas prices.

     Schumer will introduce the Reimbursing Our American Drivers (ROAD) Act of 2006 mandating the 60 cents per mile reimbursement formula and will used his seat on the Senate Finance Committee to push its legislation.  Schumer said that the low rate of reimbursement was particularly hard on the self-employed, and those who used their cars for charitable work, exactly the king of people the government ought to help, not punish.

     “Right now the rules punish millions of American workers and that’s why I’m proposing an increase in the mileage reimbursement rate to 60 cents a mile to help defray sky-rocketing gas prices.  Delivering Meals on Wheels shouldn’t put you on the fast lane to the poor house.  Right now with the IRS charitable reimbursement rate at 14 cents a mile, it almost discourages helping those who need it most.”