Windfall Profits Tax

The proto-communists that seem to run the show whenever the economy hits a speedbump have been talking up a “windfall profits” tax for BigOil. I suppose this is a punishment for the oil companies… a victory for the proletariat over the evil empire. 

Of course, this isn’t a new idea at all. 

The country has had a previous bad experience with “windfall profits taxes” on oil companies. In 1980, as a parting gift, President Jimmy Carter and Congressional Democrats imposed just such a tax.

The Congressional Research Service had “…found the windfall profits tax had the effect of decreasing domestic production by 3 percent to 6 percent, thereby increasing American dependence on foreign oil sources by 8 percent to 16 percent. A side effect was declining, not increasing, tax collections.”

While I am certainly not as concerned about “energy independence” as it seems that everyone else in America is, it certainly is not within America’s best interest to artificially increase our dependence upon oil imports.

Further, the revenues drained by these taxes handcuff the domestic oil industry’s ability to invest in exploration and development of new sources of oil (or potentially alternative energy sources). 

Dues

The New York Times published an Op-Ed (via Mises) suggesting that we stop using the term “taxes” and start calling them “dues.” I struggled reading this, as I kept waiting for the “April Fools” to appear at the end of every sentence. It doesn’t ever show up. The explanation: 

But the word “dues” also plays into the psychology of group identity, and that can work to the benefit of conservatives and liberals alike. Consider that “tax” comes from the Latin for “appraise” with punitive overtones of “censure” or “fault,” as if wage-earners have done something wrong by their labors. “Dues,” in contrast, is rooted in social obligation and duty.

The idea is to play into the psychology of the terminology. Of course even the author realizes that even this won’t make people love being compelled to pay the government once per year: