Pension funds and other tax-exempt institutional investors would be forced to pay income tax on gains from energy commodity trades, under a draft legislative proposal issued Thursday by Sens. Ron Wyden, D-Ore., and Charles Grassley, R-Iowa.
The proposal would require everyone directly purchasing oil and natural gas (or related products like diesel fuel), or indirectly through futures contracts, commodity index funds or other investment strategies, to be taxed as if they were commercial commodity traders, which pay ordinary income tax on profits from their commodity trades, according to a news release from Mr. Wydens office.
Pension funds, endowments and foundations are considered tax-exempt under current law.
Essentially the current system is giving speculators tax incentives to bid up the prices of oil, said Mr. Wyden in the news release.
Tax policy should be fair, Mr. Grassley said in the release. The public comments on this draft proposal will help us determine fair tax treatment of oil and gas speculators.
The draft legislation will be reviewed after Congress August recess.