RETURNING OIL INDUSTRY PROFITS TO CALIFORNIANS: Crude oil prices are dropping, but oil and gas companies are still raising prices on California consumers. These price hikes cannot be attributed solely to refinery maintenance issues, hurricane disruptions, or even state taxes. Governor Newsom is working with the Legislature to enact a new windfall profits tax on oil companies. Companies engaged in extraction, production, and refining of oil will pay a higher tax rate on their earnings above a set amount each year, and these recouped windfall profits will then be directed to rebates/refunds to California taxpayers impacted by high gas prices.
The decision to impose a windfall tax on energy companies marks yet another U-turn for Prime Minister Boris Johnson's government. Sunak had previously rejected the one-off levy, saying that while it sounded "superficially appealing" it would ultimately deter investment.
Reeves said Labour had first called for a windfall tax on oil and gas companies almost five months ago. And even when Sunak finally announced the one-off levy "he can't dare say the words," adding that it is "the policy that dare not speak its name."
For most of your life, money comes in at a slow and somewhat steady pace. Maybe you get a paycheck every two weeks or a Social Security payment once a month. Now and then you might get a bump from a raise, bonus, gift or side hustle. Sometimes, though, you have a genuine windfall, the type with three or more zeros at the end of it: an inheritance, an insurance settlement, a lump-sum pension payout or the proceeds from the sale of a long-held family home. Even a tax refund can seem like found money at times.
The debate over whether to impose a windfall tax has been disorienting for many, says Stephen Crolius, president of Carbon-Neutral Consulting. But with high energy bills pressuring the budgets of many households yet again, it seems reasonable to consider taxing the windfall profits of energy companies.
The debate over whether to impose a windfall tax has been disorienting for many, not least because one must look back to the 1980s for instances when the UK and US governments imposed similar forms of taxation on energy companies. But with high energy bills once again putting the budgets of many households under severe pressure, it seems reasonable to consider the windfall profits of energy companies in light of two questions.
The second question is whether energy companies will use windfall profits to further social goals that will generate benefits for the consumers who are the source of the windfall profits. Indeed, given the choice, many consumers experiencing financial challenges today may be willing to make the sacrifice if doing so will allow society to avoid the worst consequences of the climate crisis. And who better to lead that charge than the energy companies?
Biden, speaking ahead of the November 8 mid-term elections, warned that if leading oil companies do not invest some of their profits to lower costs for American consumers, they could face a windfall tax.
Under this legislation, even with the 95 percent windfall profits tax, companies would still be able to make a reasonable profit compared to previous years. Additionally, as the tax is on profit, not revenue, companies that raise prices for legitimate reasons related to rising expenses would not be penalized. However, companies that have chosen to raise prices in the pursuit of obscene profiteering, to further enrich their CEOs and wealthy shareholders, would pay a tax of up to 95 percent on their windfall profits. For example:
This legislation has been endorsed by: the Economic Policy Institute, American Economic Liberties Project, Groundwork Action, Sunrise Movement, Friends of the Earth, Food & Water Watch, and Center for Biological Diversity. Numerous scholars and policy experts have also voiced support for the windfall profits tax as a strong measure to fight inflation and limit corporate profiteering, including tax scholar Reuven Avi-Yonah, economists Emmanuel Saez and Gabriel Zucman, and Economic Policy Institute economist Josh Bivens. Read the summary, here. Read the fact sheet and statements of support, here. Read the bill text, here. 781b155fdc