August 5, 2008

CRUDE PROPOSAL:

Windfall Profit Tax -- Bad Idea (Pete Davis, 8/04/08, Capital Gains and Games)

I worked on the Crude Oil Windfall Profit Tax Act of 1980 (P.L.96-223, enacted April 2, 1980), and I'm with Senator McCain on this one.

The 1980 WPT didn't work on many levels as shown in the Congressional Research Service's analysis of March 6, 2006:

1. It reduced domestic oil production and increased our dependence on foreign oil by between 3% and 13% of oil imports;
2. It raised only $80 b. or 20% of the $393 b. of revenue projected;
3. It was costly and complicated to administer, particularly for small producers;
4. It created lots of distortions, favoring new wells over old wells and tax exempt production of state governments, certain parts of Alaska, Indian tribes, charities, educational institutions, and royalty owners. It also shifted investment from extraction and production downstream to refining and marketing. Investment was shifted overseas and jobs and profits went with it.


It's not supposed to work, just seem to be punishing corporations.

Posted by Orrin Judd at August 5, 2008 7:27 AM
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