To eliminate ‘perverse’ price gouging incentives, a Biden friend is calling for a Big Oil surtax.
Senator Ron Wyden of Oregon is working on a surtax on Big Oil to rein in the industry’s soaring profits at a time when gasoline prices are at all-time highs.
According to a representative for Wyden, an Oregon Democrat who chairs the Senate Finance Committee, the senator is considering a 21% surtax on oil and gas corporations that make more than $1 billion in revenue.
“Our dysfunctional tax code favors Big Oil over American families,” Wyden said in a statement to News
Bloomberg News first reported the idea, which includes a 25% excise tax on stock buybacks and closes an accounting loophole on inventory that critics claim allows oil corporations to understate revenues and avoid taxes indefinitely.
“By raising the corporate tax rate on excess earnings, limiting wasteful buybacks, and minimizing accounting trickery, the proposal I’m creating would help reverse perverse incentives to price gouge,” Wyden stated.
Given that oil company profits are soaring and gasoline prices are at all-time highs, such a move could be popular.
However, placing an additional tax on the oil industry could backfire by lowering investment at a time when corporations are need to spend more on costly new drilling projects to stay competitive..
According to a Wyden spokesperson, the senator’s oil surcharge differs from similar windfall profit levies proposed in Congress since it is based on profit margins rather than oil prices.
Excess profits would be subject to an extra tax of 21 percent. Excess profits would be calculated by deducting current profits from a standard return of 10% on expenses.
Only corporations with excessive earnings would be compelled to pay the tax under this idea.