SACRAMENTO (AP) - A bill that would slap a windfall profits tax on California oil producers was approved by a state Assembly committee as gasoline prices surged past $3 a gallon.
This sums up my thoughts on the matter:
There’s no such thing as a tax on profits. Sure, you can assess a tax based on profits, but the tax comes out of—have you been paying attention?—operating expenses. Which means the tax is funded by—have you been paying attention?—sales revenue. Which means the money to cover the tax is collected by—have you been paying attention?—raising prices even higher.
So California’s legislature is going to react to $3-a-gallon gasoline by driving the price closer to $4 a gallon.
Makes perfect sense—if you’re an idiot politician.
Indeed.
Sadly, national politicians (like my Senator Byron Dorgan with his push for a "windfall profits tax") don't get this.
(via The King of Fools)