Wednesday, April 26, 2006

A "Speed Pass by the Tax Man'?

In the latest of the parade of political grandstanding over rising gasoline prices, the Senate Finance Committee is now asking to examine the tax returns of major oil companies for the past five years. In the words of Chairman Charles Grassley, “"I want to make sure the oil companies aren't taking a speed pass by the tax man."

The full story can be found here:

I’m a little puzzled by this analogy, which I would guess comes from the tollway vernacular. Is there something wrong, somehow, with using a speed pass, instead of waiting in line to put in your coins? I would think that a speed pass involves efficiency, which we want in a tax system, don’t we?

But perhaps I’m being too cute by half. The real problem here is that I am highly skeptical they will be able to make any reasonable policy decisions based on the tax returns alone, without also poring over reams of additional financial data. That is a task best left to IRS auditors. But it makes for good political drama, and that’s apparently why they are doing it.

Members of both parties seem intent on making every political point possible on the gasoline price concerns of consumers. Harnessing fear is common political ploy. But the reality is that all of this effort will either do nothing helpful, or worse, it may do positive harm (as Ernie’s post from yesterday illustrates so well). We live in a global market for petroleum products, and when you have developing countries with appetites to become more like the U.S. in terms of consumption, coupled with political instability in the world, you will have higher prices. The politician's empathy (“feeling our pain”) and rhetorical bashing of "big oil" is not going to solve the problem. It will probably give me indigestion to listen to it all, though.

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This will be my last post for a week or so, as I’m headed to an academic conference in Hamburg, Germany, to present a paper on Internet gambling issues. If you are interested, you can read a copy of the paper on my faculty webpage:

Since Dr. Goss is also going to this conference, that means our colleague Terry Clark has full responsibility for the blog. Let him hear from you this week.

Best regards.

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