Advertisement
YOU ARE HERE: LAT HomeCollectionsOpinion

Crude economics

Big Oil already pays big taxes. A windfall profits tariff would stunt domestic production and cost consumers at the pump.

April 29, 2006|Jonathan Williams, JONATHAN WILLIAMS is an economist at the Tax Foundation in Washington.

It would be unfair and absurd to tax workers at different rates, based merely on the industry they work in. Similarly, it makes no sense to tax an industry punitively based on the volatility of its profits. Oil will always be a boom-or-bust business.

The U.S. debate over which group of people -- workers, shareholders or consumers -- ends up paying the bulk of these corporate taxes will go on forever. But the undisputed and most important point is that individuals pay taxes, not corporations. Therefore, attempts to punish oil companies for "obscene" profits by instituting additional taxes ultimately cause all of us to pay the price. Consumers will pay more at the pumps, and the five oil-producing states that suffered in the oil bust, including hard-hit Louisiana, won't benefit from the boom.


Advertisement

In Washington, politicians are acting as if "profit" is a dirty word, and they've painted a bull's-eye on the backs of the oil companies. With the midterm election season coming, we can expect more charges of "oil profiteering" from the profiteers on Capitol Hill.

New taxes will be no solution to high prices at the pump. President Reagan's axiom seems apt: "Government is not a solution to our problem, government is the problem."

Los Angeles Times Articles
|