60 Plus Association Warns That Windfall Tax Does Nothing To Lower Prices Or Increase Supplies

Arlington, VA – The 60 Plus Association urged leaders in Congress to remove a “windfall profits” tax provision from the Budget Reconciliation Bill, now on its way into conference committee.

“Those supporting this tax do not seem to realize how harmful it would be to average Americans, especially seniors,” said 60 Plus Association president James L. Martin. “Energy companies will merely pass this tax onto consumers, resulting in higher prices for gasoline and home heating oil. For seniors on a fixed income who are already suffering from high energy prices, this would be a disaster.”

The idea of a punitive tax on oil companies is a holdover from last year, when the Senate considered such a provision and rejected it. However, the current version of the Budget Reconciliation Bill includes language that would modify the Foreign Tax Credit and change accounting rules to bring in revenue for a home heating assistance program. These provisions, if left in the bill, would have the same effect as the windfall profits tax.

Windfall profits taxes have been levied in the past, with similar high-minded and anti-business goals. The windfall profits tax was first tried over 25 years ago, and it was a resounding failure. Enacted in 1980, the tax reduced domestic oil production from between 3 and 6% and increased oil imports between 8 and 16%. The tax was repealed in 1988 due in part to the depressed state of the oil industry.

The windfall taxes always fail, and they always punish consumers and retired workers. Congress should look for ways to reduce our dependence on foreign oil and lower gas prices, but a windfall profits tax is not an effective way of reaching that goal. We ask our representatives to look at the facts and strip the harmful tax provisions from H.R 4297.