House OKs $18B in taxes on Big Oil – USATODAY.com WASHINGTON AP — The House approved $18 billion in new taxes on the largest oil companies Wednesday as Democrats cited record oil prices and rising gasoline costs in a time of economic troubles. The money collected over 10 years would provide tax breaks for wind, solar and other alternative energy sources and for energy conservation. The legislation, approved 236-182, would cost the five largest oil companies an average of $1.8 billion a year over that period, according an analysis by the House Ways and Means Committee. Those companies earned $123 billion last year.
Very, Very bad idea, and for several reasons. Now granted, oil companies are making killing profits now, so the house wants to impose a windfall tax and use that money for tax breaks for alternative energies. I have a problem with that on principle. When oil companies were scraping by in the early 80’s did they get tax rebates? Is my 401k and various IRA’s going to take a hit because I own these companies in my portfolio? An assult on the individual investor who’s just getting by? And why should a company have to subsidize their competition. That would be like Microsoft having to cut a check to RedHat every year to help Redhat compete against them.
If congress truly wants to get our country to move to alternative energies, the Robin Hood method will simply not work, because these alternative companies know that they don’t have to raise their own capital, take risk and invest, just use other peoples profits, even if it’s a tax credit. What congress needs to do is to give companies, all companies, the option to pay a high percentage of taxes on their available case, what they earned, or invest that money in capital, growth and investments.
For the oil industry, pay the higher tax or invest that cash into new energy technologies, which would actually end up partnering with these smaller alternative companies to jointly create energy alternatives. That’s a win/win for all in my opinion.
But simply taxing success will just lead to companies, and individuals to put more effort into sheltering what they have and reinforcing their walls.