People are pushing for new taxes on oil and gas companies as energy prices climb, but the proposals focus on penalizing producers rather than addressing the underlying supply shortage.
Proposed legislation
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Big Oil Windfall Profits Tax Act – Introduced by Sen. Sheldon Whitehouse (D‑RI) and Rep. Ro Khanna (D‑CA). The bill would impose a permanent tax on crude‑oil sales equal to 50 percent of the gap between the current quarter’s average price and the projected 2025 average price.
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Taxing Buybacks from Big Oil Windfalls Act – Introduced by Sen. Chuck Schumer (D‑NY) and Sen. Ron Wyden (D‑OR). It would increase the tax on corporate stock buybacks for oil and gas firms from the existing 1 percent to 25 percent.
Critique
The proposals aim to capture “windfall” profits from higher fuel prices, but taxing producers does not resolve a supply‑side crisis. By increasing costs for oil and gas companies, the measures could discourage additional production at a time when additional supply is needed to lower consumer prices. This summary reflects a preview of an op‑ed originally published in The Hill. Source article: taxfoundation.org
