November 7, 2005
Oil Profits are not Evil
Recently, members of Congress began talking about a “windfall profits” tax on “Big Oil.” Due to pressure from consumers, these legislators are beginning to point the finger in the direction of oil companies, claiming that the companies are gouging consumers in the wake of the hurricanes. I cannot comment on the motivations of oil CEO’s, since I do not have access to their meetings. But I can comment on the idea that “excess” profits should be taxed and redistributed to consumers. This redistribution of wealth scheme is anti-free market, anti-growth and even anti-American. Profits are rewards for sound business judgement in the free market. Pursuing profit is what drives individuals and corporations to competition, innovation and lowering their prices. Installing burdensome taxes, regulations or price controls have the opposite effect. We should not be in the business of punishing success, by taxing profits. Rather, we should be lessening the regulations on both “Big Oil” and on small businesses who are competing to provide the best product at the lowest price. Ultimately it is the consumer who benefits the most.