To compete with Hillary Clinton’s pandering on a gas tax holiday, Barack Obama proposed a windfall profits tax on oil companies of his own last month. The Obama plan is not unlike the windfall oil profits tax passed by Hugo Chavez just two weeks earlier.
Obama would slap a 20% tax on the cost of a barrel of oil above $80 for all domestic oil companies. Chavez tax hits only foreign oil companies and charges a 50% rate for the cost of a barrel of oil above $70. The difference between Venezuela’s dictator and Barack Obama is only a slight matter of degree.
Heritage distinguished fellow Ernest Istook and senior policy analyst David Kreutzer discuss the windfall tax in a podcast here.
The Tax Foundation looks at who would be hurt by such a windfall tax and concludes:
A windfall profits tax on big oil companies may sound good in theory, but it will be paid by individuals. The individuals who bear the tax in the short run will be shareholders of the oil companies at the time of the imposition of the tax (or announcement thereof). That’s because the value of the individuals’ stock holdings (which reflect expected future net profits) will fall as soon as the new tax is announced.