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tions on trade, it became clear that many of our past trade decisions and policies were not well monitored by either the Executive Branch or by the Congress and some in fact were ill-considered to being with. More attention to this area, more oversight and more analysis of the facts surrounding specific types of trade are needed.
The Ways and Means Committee worked hard to try to make the Housepassed trade bill one which would meet the legitimate grievances of those who might be adversely affected by trade. This was done by specific procedures whereby the facts and all appropriate views on a particular case could be presented in the open and a decision could be made by a set, orderly process. In my view, it is only by this kind of decision-making process that we can (1) restore eroding confidence in government, and (2) convince all affected parties, and the public, that our trade policies are made on the basis of the facts, not rhetoric or political pull, and that they are prudent ones which benefit rather than harm our workers, consumers, industries and farms.
It is my sincere hope that the trade bill which is finally approved will require us to pay more attention to our trade and other economic policies and to make better decisions in these areas. If we are to do a good job on this, we're also going to have to make sure that we have top-flight people staffing the important agencies which deal with trade, including the Tariff Commission.
The timely passage of a good trade bill will. I feel sure, go a long way toward minimizing our economic conflicts with other nations. The economic and political benefits which will flow from this will be enormous. Thank you for your time. Senator TALMADGE. Has Senator Hartke arrived yet?
The Chair is delighted to recognize one of our own distinguished members of this panel, the Senator from Indiana, the Honorable Vance Hartke.
Senator HARTKE. Good morning, Mr. Chairman.
Senator TALMADGE. We are delighted to have you with us on the other side of the table for a change.
Senator HARTKE. I just wanted to say the other side of the table, but maybe this is a better side of the table.
STATEMENT OF HON. VANCE HARTKE, A U.S. SENATOR FROM
THE STATE OF INDIANA
Senator HARTKE. It is 3 years ago that I stood before Congress and I warned at that time of the international trade and investment crisis which was then beginning to engulf us. At that time, I said that disorders in our foreign trade “would threaten the livelihood of most Americans and the status of this country as a world industrial leader."
Today, after two devaluations, the loss of thousands of domestic jobs, and blackmail in the international marketplace, we are in the very throes of that crisis. Its destructive effects continue unabated because we have failed to adopt a comprehensive course of assertive self-interest in world trade.
Unlike the Trade Reform Act, H.R. 10710, the Foreign Trade and Investment Act, S. 151, directly addresses the major irregularities
and problems of international finance and their effect upon the American economy. Specific mechanisms are provided for plugging tax loopholes which provides an incentive at the present time to invest abroad, correcting our balance-of-payments deficits, and assuring American jobs and preserving our industrial base.
The administration's bill contains no provisions to remove tax breaks on overseas investment, to regulate the wholesale exodus of America's newest technology and production units, nor does it combat the rising prices in the United States caused by our present trade and investment problems. In short, the President's bill is obsolete and dysfunctional.
Unless we address ourselves to the real trade problems with a comprehensive trade bill, crises like the one we are experiencing in energy will continue and worsen. The Foreign Trade and Investment Act, which I first introduced in 1971 and then again in January of 1973, can avert future crises.
Let us look at one that is before us right now, and that is tax loopholes, the international oil monopoly, and the U.S. dependence on Arab oil.
The United States is now dependent upon the Arab world for its supplies of oil and gas because our present tax structure provided the economic incentive for gigantic U.S.-based multinational petroleum companies to go abroad rather than to produce more oil at home.
The single most direct tax loophole available to corporations which move abroad is the foreign tax credit. Our tax laws provide that foreign subsidiaries of the U.S. corporations may credit their foreign taxes paid against the foreign source income tax liability of the parent corporation.
The multinational oil companies earned $1,085 million on mining and oil operations abroad in 1970, $1,085 million, but because of their use of the foreign tax credit loophole, these firms paid not one penny in U.S. taxes on that income.
The Arabian American Oil Co., Aramco, a huge oil producing consortium consisting of Exxon, Texaco, Mobil, Standard of California, and the Saudi Arabian Government, is the world's largest petroleum producer and the world's largest money raiser. But they are very skimpy U.S. taxpayers.
In 1973, the company had gross revenues of $8.7 billion and a net income of profits after taxes of $3.25 billion. How much did they pay to Uncle Sam, the U.S. Government? No income tax whatsoever and a meager $2.7 million in payroll taxes.
Mr. Chairman, I would like to submit an Aramco tax statement for the record.
Senator TALMADGE. Without objection, the entire statement will be inserted in the record, Senator Hartke.
[The material referred to follows. Testimony continues on p. 1430.]
Dividends declared by Aramco to shareholders 1
1969 1970 1971 1972 1973
1 Exxon, Texaco, Mobil, and Standard Oil of California.
$706, 255, 896 666, 417, 841
810, 523, 926 1, 566, 347, 913 2, 592, 871, 189
STATEMENT OF INCOME AND EARNINGS RETAINED IN THE BUSINESS (CONSOLIDATED)
[In thousands of dollars)
Iin Thousands of dollars)
Actual Dec. 31, 1972
Cash in banks and on hand.
Crude oil, refined products, and other merchandise stocks..
Total current assets_
the provisions of the general agreernent dated Dec. 20, 1972, and related documents.
94, 149 291, 161 57, 228
5,793 598, 455
4, 163 2,533 37, 199
Properties, plant, and equipment:
Tapline property, plant, and equipment.
Net properties, plant, and equipment..
Loans to local municipalities.
Employee housing and other. Prepaid and deferred charges....
Total other assets and deferred charges..
capital shares by Aramco to implement, in the corporate form, the provisions of
subscription agreement between Aramco and the Saudi Arab Government..
ance with the provisions of the general agreement dated Dec. 20, 1972, and re
lated documents.... Net assets.
1, 225 105, 124 1,520, 772
1, 167 105, 124 866, 357
146, 900 2,015, 221
[Figures in parenthesis denote deduction)
Cash (schedule 1)..
Crude oil and products, at average cost which is less than market.
Total current assets.
segregated for employea thrift plan deposits).
Working capital (deficiency)..
Less accumulated depreciation and amortization.
Property, plant, and equipment, net.
Long-term loans, advances, and receivables.
Total other assets.
Employee pension plans (note 2)...
Total noncurrent liabilities...
Capital stock, $109 par value, authorized, 11,667 shares; outstanding, 11,6663..
Total stockholders' equity....