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Windfall Profit Tax Defeated
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Senate Republicans blocked a proposal Tuesday to tax the windfall profits of the largest oil companies, despite pleas by Democratic leaders to use the measure to address America's anger over $4 a gallon gasoline.I wrote a while back about the inequity and ineffectiveness of taxing windfall profits, particularly as it relates to alleviating the pain at the pump high gas prices are causing. First, you can't very well penalize the oil companies for engaging in pure capitalistic practices and second, any increased taxation on oil companies would be paid for by customers at the pump.
The Democratic energy package would have imposed a tax on any "unreasonable" profits of the five largest U.S. oil companies and given the federal government more power to address oil market speculation that the bill's supporters argue has added to the crude oil price surge. (Link)
That said, eliminating some of the oil industry tax loopholes and credits would raise sufficient funds to do some serious alternative energy development.
The oil industry is being short sighted here. They can either decide to milk the oil reserves dry and miss out on taking a lead position on the development of alternative fuels, or they can get on board and position themselves as industry leaders in the manufacture and marketing of the next wave(s) of energy sources.
The problem is that the oil companies have all the "hand" at this point. It will require some big time cojones on the part of American politicians to challenge that power.
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