RELEASE: CAP Calls for Temporary Windfall Profits Tax on Oil and Gas Industry
Washington, D.C. — The Center for American Progress is calling on Congress to enact a temporary windfall profits tax on oil and gas companies that are raking in record profits at a time of crisis.
The plan, outlined in a new piece, comes as recent polling shows that more than 80 percent of voters favor placing a windfall profits tax on the extra profits these companies are making from the higher gasoline prices they are charging because of Russia’s war against Ukraine.
“We can’t let big oil companies use the war in Ukraine as an excuse to reap windfall profits at the expense of American consumers,” said Seth Hanlon, a senior fellow at CAP and co-author. “It’s time for a targeted tax on profits that ensures fairness and sends the savings back to consumers.”
The CAP plan would set a windfall profits tax with a rate that would rise and fall with the fluctuation of crude oil prices until they return to pre-crisis levels. This approach would temporarily raise the tax rates paid by oil companies on their profits during the period that oil prices are at elevated levels.
By taxing only profits and not operating costs or investment expenditures, this approach does not increase the marginal costs of producing fuel and would not be passed onto consumers. And, since it is a temporary tax on the oil companies’ windfall from the crisis, it would not be expected to alter investment decisions.
“The only sustainable solution for our long-term challenges is investment in clean energy,” said Trevor Higgins, vice president for Climate Policy at CAP and a co-author of the brief. “But at a time when families are being pinched by higher prices that are inflating oil companies’ profits, Congress should tax the companies’ windfall and provide relief for consumers.”
Read: “As Energy Prices Skyrocket, Congress Must Return the Oil and Gas Industry’s Windfall Profits to the American People” by Seth Hanlon and Trevor Higgins