Byron Dorgan is calling for a "windfall profits" tax on oil prices that exceed $40 per barrel. The worst part of this is that the Senate as a whole has fallen for this concept and passed such a tax on oil inventory, as if the oil companies control the worldwide demand.
All the windfall profits and inventory tax would do is heap a larger tax burden on oil companies (who are paying more and more taxes as the price of oil increases -- 35% of record profits is higher than the 35% corporate tax levied against meager profits). Does any Senator actually believe that the oil companies would just absorb those taxes instead of passing costs on to consumers? If so, that Senator is too naive to hold his or her seat. This is simply a soak-the-rich attempt that will redound to harm consumers.
And a fine discussion of why comes from this classic 2004 James Lileks fisking of Andrew Sullivan's call to raise gas taxes because prices are too low (which is what Dorgan's proposal would ultimately do).
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