Oil Windfall Tax: A Good Idea

Reuters: Obama backs oil profits tax

Background
After gas prices skyrocketed pass $4 last week, and as they continue to head up this week, some may have been hoping for a quick fix in the style of the (completely useless) economic stimulus some weeks ago. In response to those concerns today, Obama pledged to raise taxes on windfall oil profits if elected. This position would be politically unsustainable for the simple reason that nobody wants new taxes in a time of an economic downturn, so Obama appended to his position that he would "use the money to help families pay for their skyrocketing energy costs and other bills."

Several weeks ago, a bill was blocked by Republican opposition that would have repealed tax cuts for oil companies and instead used the 10-billion-something-dollars to pay for tax rebates for renewable energy.

A good idea
If the plan Obama has proposed was enacted in coordination with the repeal of tax cuts, it would be a good move for the economy of the U.S., our long term safety, and our long term economic outlook. The windfall tax profit would have help boost the economy through its profits, but, as well, would raise gas prices, as would the repeal of tax cuts. Though that may damage the economy in the short run, in the long run, it would save much time in effort. First, if gas prices were higher, hybrids, all electric cars, and renewable energy would look much more attractive to the average consumer. Second, if some of the pain of fighting global warming is felt now, it won’t be felt later, when it could come in a large burst after the approval of a cap and trade program.