As the midterm elections are among us, U.S. Gas prices are still extremely high. To address this problem, President Biden stated that he is seeking to charge more taxes on certain oil companies. The oil companies that he seeks to put a higher tax on are the ones currently recording “windfall” profits (AKA unusually high or abundant) while choosing not to reinvest in production.
President Biden Statement
“The oil industry has not met its commitment to invest in America and support the American people,” Biden said in a statement last week. He also stated that companies that do not show that they are investing in reproduction are “going to pay a higher tax on their excess profits and face other restrictions.” The president is currently planning to work with Congress to explore the available options.
Evasive Windfall Profit Tax
Many people believe that the President has his hopes up when it comes to initiating a windfall profit tax, as members of Congress have been seeking to impose a windfall tax for more than 10 years without any success. The Senate is also evenly divided between Democrats and Republicans, which makes this proposal even more unlikely to be passed.
Depending on the outcome of the midterm elections, the proposed windfall tax does have a chance of being passed, but the Democrats would have to win big on election day. Many also believe the talks of this tax are solely a political play in hopes of diverting some of the heat President Biden is taking over gas prices.
High Gas Prices Motivating Factor
The taxation of the profits of certain oil companies has always been a topic of conversation in Congress. Recently, even more attention has been drawn to this idea after the country has seen a surge in gas prices over the last several months, and record high prices have been experienced.
Proposal Resembles Other Countries
The new proposal from Biden is quite similar to the action that politicians across Europe have taken against big oil companies in recent years. These actions include cracking down on the companies in the oil industry that are gaining record profits from power generation and fossil fuels.
What countries have been seen doing is using cash raised from windfall taxes to assist in subsidizing the enormous energy bills experienced by all households
Critics of the Proposal
Like any government proposal, not everyone in Congress agrees with the recent proposal made by the Biden administration. Critics believe that the windfall tax will defer oil companies from making investments that are vitally important to keeping gas prices down and increasing the supply.
Wrap Up
The proposed windfall tax still needs to go through a lot of steps if it is ever imposed. As midterm elections are here, the Biden Administration will have to steal several seats in the Senate for this proposal to even have the slightest chance of coming to fruition