Strange Bedfellows

The legislation being filibustered by Senate Republicans imposes a windfall profits tax on the oil companies, it rescinds billions of dollars in tax breaks to these companies and it places new restrictions on the trading of energy futures by Wall Street hedge funds.

Senator Bernie Sanders is a strong supporter of the bill.

Douglas says the energy situation is so serious that a windfall profits tax on the oil companies needs to be considered.

---VPR News

Now, there is a difference between being a strong supporter of a windfall profits tax and saying that it should be considered, but the similarities between the views of Senator  Sanders and Governor Douglas is unusual, depressing, and disappointing.

A few questions for both the Governor and Senator:  Exactly how do you define when a company is earning "windfall profits?"  Is it measured in billions of dollars?  If so, then small oil companies would be exempt from the tax.  Or is it measured in profits as a percent of something?  If so, a percent of assets?  Revenues?  Or something else? 

If you're willing to define it either way, then why are you singling out oil companies?  Why not drug companies as well?  Or companies that make superpremium ice cream?  Or high end coffee?  Or expensive stuffed animals?  Or makers of computers?   Or sellers of computers? Or all firms, private and public? 

Here's a thought.  How about a windfall profits tax on homeowners who can sell their houses and make a 100% or 200% profit over what they bought it for ten years ago.  Then use that money for affordable housing.  Isn't that a great way to finance affordable housing?  Tax the people who benefited from the runup in prices and use it for a worthy goal.  After all, the homeowners were just lucky that prices went up, just like the oil companies.  It's not like they invented something or were entrepreneurial.  They were just dumb lucky.   Or would you not support that policy because it would cost you too many votes? 

But bad ideas don't end with windfall profits taxes.  Governor Douglas is quoted as saying, in the same news story, that

...he supports a suspension of the federal gas tax for the summer to help lower prices. But he says he won't back a suspension of the state gas tax because of concerns about the fiscal stability of Vermont's Transportation Fund.

Why the inconsistency, Governor?  If suspending the federal gas tax of 18 cents will lower prices, then why not add Vermont's 20 cents to the mix and lower prices even more?  If you're worried about the Vermont Transportation Fund, then why aren't you worried about federal revenues available to spend on roads and bridges (after all, 80% of the cost of many Vermont projects comes from that federal money)? 

Unfortunately, Governor Douglas is putting himself in the mindset of too many members of Congress, who see federal spending as divorced from the tax revenues needed to fund that spending.  Governors don't have that luxury, which is why it's a good idea to keep as much taxing and spending at the state and local levels as possible.

Comments

[Green Mtn Punter]

I would like to see Art Woolf posted TDY as economic policy advisor to the McCain Campaign. Here the Republicans are in a position to sweep back into Congress and the White House and all we hear is "Me, too". Abundant, affordable energy is fast becoming the overriding issue of Campaign '08 and the pol who can deliver the plan to do this in the shortest period of time stands to reap an abundant harvest of votes from the many average Americans who will be voting in November.

[Green Mtn Punter]

Message to McCain and The Republicans: Abundant and affordable energy on demand is the only message for Campaign '08. Recant your heresies and Carpe Diem. Democrats are totally vulnerable and no amount of media coverup is going to save them this time. So, who's going to rush into the vacuum? Republicans or a new Independent Energy Party? Outside the Beltway the natives are getting more restless by the day and 2008 won't be just another year of business- and politics- as usual.

[Sheldon Katz]

Another fine catch by Professor Woolf. We should also consider a windfall profit tax on authors of bestsellers e.g. Barack Obama. It can take as much effort, if not more effort, to write a book that is not a bestseller. And fortuity is often the most important between the two. For example, I understand that Barack Obama's book is largely a series of bromides. It may have been the fortuity of his unusual heritage that sold his book and launched his political career. Since Sen. Obama is a strong supporter of windfall profits on "Big Oil," why not "Big Authors"?

Note: This was not my original idea. I believe it came from Powerline.com.