Suitably Flip

Let's Break Windfall Profit Taxes

This week, the Senate begins hearings on Big Oil's Big Profits.  Senators Chris Dodd (D-CT) and Byron Dorgan (D-ND) are hellbent on instituting the profoundly misguided "windfall profits tax" (see A Supremely Horrible Idea) to ensure that oil exploration and refining is turned into a less attractive, less efficient, less productive industry; that you in turn pay more at the pump and to heat your home; that America is in turn more, not less dependent on foreign oil; and that we can all sleep soundly - if stubbornly (and under lots of blankets) - at night knowing we poked the greedy oil companies in the eye.

Jonathan Williams and Scott Hodge at the Tax Foundation have published a new analysis of this unspeakably foolish and indefensible proposal (excerpting and emphasis mine):

Before rushing to create a new federal tax, lawmakers should ask two questions:

(1) Do oil companies currently pay too little in taxes compared to profits?
(2) What was the effect of the last windfall profits tax enacted in 1980?

The answer to the first question is that over the past 25 years, oil companies directly paid or remitted more than $2.2 trillion in taxes, after adjusting for inflation, to federal and state governments—including excise taxes, royalty payments and state and federal corporate income taxes. That amounts to more than three times what they earned in profits during the same period, according to the latest numbers from the Bureau of Economic Analysis and U.S. Department of Energy.

These figures do not include local property taxes, state sales and severance taxes and on-shore royalty payments.

The answer to the second question, according to the Congressional Research Service (CRS), is that the 1980s windfall profits tax depressed the domestic production and extraction industry and furthered our dependence on foreign sources of oil.

E-mail Senators Dodd and Dorgan and your own Senators and insist they break windfall profit taxes.

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Let's Break Windfall Profit Taxes

This week, the Senate begins hearings on Big Oil's Big Profits.  Senators Chris Dodd (D-CT) and Byron Dorgan (D-ND) are hellbent on instituting the profoundly misguided "windfall profits tax" (see A Supremely Horrible Idea) to ensure that oil exploration and refining is turned into a less attractive, less efficient, less productive industry; that you in turn pay more at the pump and to heat your home; that America is in turn more, not less dependent on foreign oil; and that we can all sleep soundly - if stubbornly (and under lots of blankets) - at night knowing we poked the greedy oil companies in the eye.

Jonathan Williams and Scott Hodge at the Tax Foundation have published a new analysis of this unspeakably foolish and indefensible proposal (excerpting and emphasis mine):

Before rushing to create a new federal tax, lawmakers should ask two questions:

(1) Do oil companies currently pay too little in taxes compared to profits?
(2) What was the effect of the last windfall profits tax enacted in 1980?

The answer to the first question is that over the past 25 years, oil companies directly paid or remitted more than $2.2 trillion in taxes, after adjusting for inflation, to federal and state governments—including excise taxes, royalty payments and state and federal corporate income taxes. That amounts to more than three times what they earned in profits during the same period, according to the latest numbers from the Bureau of Economic Analysis and U.S. Department of Energy.

These figures do not include local property taxes, state sales and severance taxes and on-shore royalty payments.

The answer to the second question, according to the Congressional Research Service (CRS), is that the 1980s windfall profits tax depressed the domestic production and extraction industry and furthered our dependence on foreign sources of oil.

E-mail Senators Dodd and Dorgan and your own Senators and insist they break windfall profit taxes.