When gas prices rise, members of Congress often call for a "windfall profits" tax on U.S. oil companies, with the aim of redistributing profits from "greedy" oil companies. The last time this country experimented with such a tax was the Crude Oil Windfall Profit Tax Act of 1980. According to a 1990 Congressional Research Service study, the tax depressed the domestic oil industry, increased foreign imports and raised only a tiny fraction of the revenue forecasted. It stunted domestic production of oil by 3% to 6% and created a surge in foreign imports, from 8% to 16%.
The nation's energy companies are already providing a "windfall" of taxes. According to Department of Energy data, from 1977 to 2004, federal and state governments extracted $397 billion by taxing the profits of the largest oil companies and an additional $1.1 trillion in taxes at the pump. In fact, oil companies have paid in taxes more than three times what they earned in profits during those 28 years.
Additional questions about windfall profits taxes? Contact us at (202) 464-6200.
I’m in California for a short vacation but tomorrow, the California Supreme Court will hear oral arguments in Gillette Co. v. Franchise Tax Board so I’ll be going to that. (If I can get in – the Court is also hearing...