There's all sorts of reasons why a "windfall-profit" tax on the oil industry would be a terrible economic and political decision, but aside from the blatant immorality of stealing money from stockholders just because they've got it, there's a very insidious underlying assumption: why does anyone think that Congress can spend that money better than the companies' shareholders?
These large oil concerns are already subject to a 35% corporate income tax rate, and record profits mean commensurate tax payments to the federal Treasury. According to a new report from the Washington-based Tax Foundation, Exxon, ConocoPhillips and Chevron paid a combined $44.3 billion in corporate income taxes in 2005, or 49.2% more than the $29.7 billion they paid the previous year.
Furthermore, says the report, "the average effective tax rate on the major integrated oil and gas industry is estimated to equal 38.3%. This exceeds the estimated average effective tax rate of 32.3% for the market as a whole." In other words, even without Congress' would-be ex post facto confiscation of profits, energy companies are already providing the Members with a "windfall" to use to finance their 14,000 spending earmarks.
Some of the same politicians calling for these punitive measures also fantasize about "energy independence," while blocking methods to achieve it. Washington Senator Maria Cantwell, for instance, has sent letters to regulators demanding investigations into why there aren't more refineries in the U.S., but she supports restrictions on refineries in Puget Sound. Senator Byron Dorgan of North Dakota wants a 50% tax on the price of oil above $40 per barrel and would exempt companies that invest in new energy production. Yet Mr. Dorgan opposes new energy production in places where companies want to explore, such as the Arctic National Wildlife Refuge and the Outer Continental Shelf.
I'd support a Constitutional amendment that fires every government employee, elected or appointed, who makes over $100,000 per year and bans them from ever again earning a nickel from the public treasury. We need a government that stays out of our business and shows a lot more humility by recognizing that it doesn't have the solution to every "problem".