Someone please remind me why conservatives and advocates of free markets & capitalism should vote Republican. It isn't for this kind of economically destructive posturing.
With the public clamor over high gasoline prices reaching deafening levels, Senate tax experts have decided to scrutinize the tax returns of the nation's largest oil companies.The Senate Finance Committee announced late Wednesday it would ask the Internal Revenue Service to provide the corporate tax returns from the 15 largest oil and gas companies going back five years.
"We're seeing record profits and significant executive compensation in the oil and gas industry," Committee Chairman Charles Grassley, R-Iowa, said in a statement. "We all know there can be a slip between cup and lip on corporate profits made and taxes paid. I want to make sure the oil companies aren't taking a speed pass by the tax man."
Now there are ravings about a "windfall profits" tax on the oil industry, again (politicians never learn, and don't care to). Here's a bit of sanity about that , thanks to a pair of observers from the free-market Cato Institute.
THE recent spike in gasoline prices has set off a stampede of politicos demanding that hammer and tong be applied to that all-purpose bogeyman, "Big Oil." Egged on by the red-faced anger served up by rant-and-rave TV populists, Congress may prove unable to resist passing a windfall profit tax before voters go to the polls this fall. If so, we'll experience the full meaning of H.L. Mencken's adage that democracy is that form of government in which the people get exactly what they want — good and hard.Posted by Alan at April 27, 2006 06:46 AMWhat they won't get, however, is nearly as much money out of such a tax as they probably think. A windfall profit tax targeted at earnings far beyond the U.S. industrial average would return zero revenue to the Treasury because windfall profits in the oil sector are figments of the imagination....
If investors are discouraged from putting their money into the oil sector, there will be less oil and gas on the market and, thus, higher prices than would have otherwise been the case.
Regardless, the United States already has a corporate income tax in place to harvest "windfall profits" regardless of which sector produces them. Taxing profits differently depending upon which sector of the economy coughs them up gets the government in the business of allocating capital across the economy as a whole. This would introduce politics into places where politics simply should not go.
This is not simply idle ideological speculation. We've actually been down this road before in the form of the Crude Oil Windfall Profit Tax of 1980. According to a study published by the Congressional Research Service, the tax discouraged investment in the domestic oil industry to such a degree that domestic oil production was 3 percent to 6 percent less as a result of that tax, and foreign oil imports grew accordingly by 8 percent to 16 percent. There isn't a single credentialed oil economist in the country who would argue that windfall profit taxes are good for consumers.