Wednesday, September 03, 2008

Oil taxes

I think Anonymous was referring me to this at Beldar. Beldar is explaining the difference between the increased tax revenue that Gov. Palin got out of the oil companies and that proposed tax by Obama. Palin negotiated a higher rate on the extraction of a state-owned, depletable asset ("to recompense the state for its loss of a non-replaceable resource"). Obama proposes a tax on windfall profits.

OK. Interesting. Thanks for saying something. I had not appreciated that distinction.

So now I'm wondering why, from a free-market perspective, Palin's higher taxation is better. With a higher severance tax, the oil companies for sure have to pay higher taxes. With a windfall profits tax, they only have to pay if they're wildly ridiculously profitable. Isn't greater taxation of corporations a no-no to fiscal conservatives? Or are you thinking that it's different because with the higher severance tax, the cost gets added to the product and then consumption is reduced in response, and since we're trying to save energy, that's a good thing? But isn't that going to be true of the windfall profits tax too? Or is the objection that the windfall profits tax is too unpredictable for oil companies to do a good job of charging the tax through? Or is it that you view the severance tax as really just a sale price for an asset owned by Alaska, whereas the windfall profits tax would be redistribution of an asset owned by oil companies to all U.S. citizens and that is philosophically unacceptable? How about the fact that the U.S. subsidizes oil production?

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