I’m hard-pressed to imagine a scenario in which simplifying the tax structure is bad. Although this legislation would only achieve it on the front-end, replacing simplification with complication elsewhere, the front-end suggestion is good.
The House of Representatives brushed aside threats of a White House veto yesterday and voted 236 to 182 in favor of an $18 billion tax package that would rescind a tax break for the five biggest oil companies and use the revenue to boost incentives for wind and solar energy and energy efficiency.
There is no reason for Congress to pick winners and losers by giving tax breaks. (Again, redirecting those breaks to favored groups is not a principled stance by Congress.) As always, Congress is horribly short-sighted and unaware of unintended consequences.
The Bush administration, Republican lawmakers and big oil companies condemned the bill, which they said would raise fuel prices for consumers, discourage oil and gas exploration in the United States and unfairly discriminate against a single industry while other manufacturers continue to enjoy tax breaks.
Of course fuel prices will go up. If I could find a reason not to be cynical, I’d ignore the probability that members of Congress want this to happen so they have a continuation of one of their favorite targets to bully in populist, economically-ignorant rants. But I’m cynical, so I think they know this. How else to explain the nonsense my local Fox affiliate bombarded me with last night in claiming that a gallon of gasoline could rise to the “outrageous” price of $4. Adjectives require more than one data point.
That the price of a gallon of gas already includes – inefficiently – the $18 billion cost of the existing tax break. Removing inefficient tax breaks would push the price of gas (closer) to its true market price. That’s problematic?
On the second point, profit alone should encourage or discourage oil and gas exploration. Let the market figure out the details. The ongoing results will also work to push for alternative energy without requiring shifting tax breaks from one group to another. And, no, arguing that one industry will get tax breaks does not justify giving them to another.