The Patriot Post® · In Brief: Dem Windfall Profits Tax Would Raise Gas Prices
“American families are seeing record high prices under the Biden economy,” says Alex Hendrie, director of tax policy at Americans for Tax Reform. “Inflation has increased by 8.6% over the past year, a six-fold increase from when President Biden took office in January 2021.”
Obviously, this isn’t “Putin’s price hike,” as Biden loves to deflect. It has to do with his policies of flooding the economy with “free” stimulus money. On energy, Biden has constricted fossil fuels in order to make gas more expensive and transition the United States to his green energy utopia. No wonder gas prices are now more than $5 a gallon on average nationwide, and more than twice what they were when Biden started canceling pipelines and drilling permits. Experts say $6 isn’t far off.
Which brings us to the Democrat “plan.”
According to the Democrats, the solution to these high prices is tax increases — the administration is pushing a trillion-dollar tax hike they say will help address inflation.
Separately, progressive lawmakers like Sen. Sheldon Whitehouse, Rep. Ro Khanna and Sen. Elizabeth Warren want to impose a discriminatory windfall profits tax on American energy producers to “solve” high gas prices. The White House recently said that it is open to this tax, arguing that American energy producers are responsible for high gas prices.
In reality, higher taxes are not the solution to inflation. Instead of helping reduce costs for families and businesses, they will be passed along to consumers in the form of higher prices or reduced supply.
A windfall profits tax is no exception — it would do nothing to reduce gas prices but would instead lead to higher prices.
This is basic economics, and Team Biden is well aware of it, even if ignoring reality in favor of pursuing utopia is the preference. They want to “impose a 50% tax on the difference between the current price of a barrel of oil and the average price per barrel between 2015 and 2019.” We don’t just think this won’t work, we know from past experience. Jimmy Carter tried it and:
The tax was repealed just eight years later because of numerous problems including that it raised, not reduced prices.
It was a boon to foreign countries as it increased dependence on foreign oil by as much as 13%.
It was so difficult to administer that it was described as one of the most complex ever levied in U.S. history, according to the report by the Government Accountability Office.
It also raised little revenue — when the tax was first imposed, it was projected to raise almost $400 billion. Instead, it raised less than 20% of that amount — just $80 billion.
Doing the same thing today and expecting different results would be insanity. Disastrously expensive insanity.
Hendrie concludes:
The fact is, Democrat policies have led to record-high inflation and gas prices.
However, the solution is not new tax increases. Imposing a windfall profits tax on American energy would make this problem worse, not solve it. This failed tax will only raise gas prices, increase dependence on foreign oil and threaten high-paying American jobs.