This really should be common sense

John Lott, Jr (author of Freedomnomics and More Guns, Less Crime) has a article over at Fox News discussing the current high gas prices, whether the oil companies and speculators are at fault, and what should be done, including sanctions or a “windfall tax.” I really can’t comprehend the thinking that the federal government should impose the “windfall tax” on the oil companies. While it may seem only fair to take money from the companies that are getting so much of ours, the only possible results are bad for consumers. A tax on a company is a cost of production, and must be recuperated for a business to be profitable. How do companies make money? They charge for their goods and services. How do they make profit? By charging more than the cost of production. And if the cost of production goes up, the price charged for the goods and services must be adjusted accordingly. And while the gas tax holiday is probably little more than gesture politics, it is more than a little hypocritical for the government to complain about the oil companies profits while taking about 3 times as much in taxes.


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