Say Anything Blog

From the Wall Street Journal:

Now that President Bush has declared a national commitment to end our alleged addiction to foreign oil, naturally the first energy bill that Congress wants to enact this year would make America more dependent on foreign energy companies.

That would surely be the result if Congress passes two provisions buried in the Senate version of a tax bill now in House-Senate conference: One is a tax on oil company inventories, which is a disguised windfall profits tax on five big oil companies; the second would repeal the foreign tax credit for the same companies.

Democrats -- and Maine Republican Olympia Snowe -- promoted the provisions late last year as a way to punish the companies whose CEOs had defended their pricing policies before Congress. But the more you understand the details, the nuttier this looks. For example, the $4 billion to $5 billion windfall tax on inventories applies only to the reserves of U.S.-based oil producers (such as Exxon and Chevron), while foreign producers pay nada.

This is an energy policy only Arab oil sheiks could love, because it drives their production and profits up, at the expense of home-grown producers. When Congress last passed a windfall tax on oil in 1980, America's domestic crude oil production plunged and demand for foreign oil increased by almost 15%. We imposed a tax on ourselves and OPEC nations got the windfall.

Equally wacky is New York Senator Chuck Schumer's idea to deny the same companies the U.S. foreign tax credit -- a fixture of the corporate income tax since 1917. If this took effect, American oil companies would have to pay the U.S. corporate tax rate and the taxes in the country where it produces the oil. Almost no other nation in the world requires companies to pay a double tax on foreign profits.

So if Mr. Schumer has his way, U.S. oil companies would have to pay as much as a 25% higher tax on foreign-produced oil than if it were drilled from the ground by a French, Chinese or Danish firm. Mind you, the U.S. would still import the oil, but any profits from that oil would flow to foreign, rather than U.S., firms and investors.

Read the whole thing.

This move by American politicians to "punish" American oil companies for being to profitable is going to backfire if the people behind it, primarily Democrats like my own Senator Dorgan, get their way.

I know it is fashionable for those on the left to be against any type of success for big business here in the U.S., but punishing these companies is only going to make us more beholden to foreign countries. New taxes on oil won't make us less dependent on oil, it will only make that oil cost more for Americans.

I don't think that's what we should be trying to do right now.