New Tax Foundation Study: Sound Energy Tax Policy Nowhere in Presidential Plans

2008-05-06 23:38:01 -

- Tax Foundation William Ahern, 202-464-5101 awa@taxfoundation.org The oil profit taxes and gas tax cuts suggested by the presidential candidates make little or no economic sense, according to a new Tax Foundation analysis of the Obama, McCain and Clinton responses to rising gas taxes.

None of the three policy solutions, neither the McCain tax cut nor the Obama tax hike nor the combined tax cut and tax hike suggested by Clinton, is a coherent part of a logical approach to energy tax policy, says Tax Foundation senior economist Gerald Prante.

The new study is Tax Foundation Fiscal Fact, No. 127, "The Distributional Impact of Windfall Profits Taxes and a Gas Tax Holiday" available at www.taxfoundation.org/publications/show/23180.html. It gives the estimated impact on each income group of the gas tax cuts offered by McCain and Clinton, as well as the oil profit tax proposed by Clinton and Obama.

Prante finds the temporary gas tax cut will have a measurable benefit for people who have invested in oil companies, either directly by buying oil company stock, or indirectly through mutual funds, pensions, union funds and other savings vehicles that are invested in oil companies. However, Prante asserts that prices at the pump would not fall unless the tax repeal is permanent. Both McCain and Clinton are suggesting only a temporary federal gas tax repeal.

Prante finds Obama's plan to be even more counterproductive, costing households in every income group.

Sen. Clinton's idea of ordering gas stations to lower their prices by the amount of the tax cut "is the worst provision of them all," says Prante. "That is economically equivalent to price controls."

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

Temporary Gas Tax Cut Proposed by McCain and Clinton, Oil Tax
Hikes by Obama and Clinton