As regular gasoline is averaging over $4 a gallon nationwide for the first time, Congress is considering a new tax on oil companies. Iowa Senator Chuck Grassley says he’ll oppose the proposal going before the Senate today which would levy a "windfall" profits tax on the five largest U.S. oil companies.
"We tried a windfall profits tax, 1978, ’79, ’80 I believe it was. Made the situation worse," Grassley says. The proposal is being suggested by Democrats. Grassley, a Republican, says it’s a bad idea. In addition to the new tax, the legislation would eliminate some 17-billion dollars in tax breaks oil companies were expecting over the next ten years.
Reports say the nation’s five biggest oil companies raked in 36-billion dollars in profits during the first three months of this year. The legislation would impose a 25% tax on profits over what would be determined as "reasonable." Grassley says if those who are proposing the windfall profits tax would look to their recent history, they’d see better solutions based on the experiences of 30 years ago.
Grassley says: "The thing that finally got the price of oil down when it was probably as high, considering inflation, as it is right now, was deregulating oil, reducing the taxes and allowing drilling in more places." Grassley says environmentalists "have a hold" on the Democratic Party, which is why we aren’t drilling for the 13-billion barrels of oil which the experts say lies beneath one section of Alaska.
"I would suggest to the Democrats that when you tax something, you get less of it. When you don’t tax so much, you get more of it," Grassley says. "If they are really concerned about the price of oil, then we need to be drilling every place in America where we know there’s oil."
Triple-A says the nationwide average for a gallon of regular gas is $4.04, while it’s averaging $3.91 a gallon in Iowa — a record high for the state.