Tuesday, May 25, 2010

President Obama's solution the the Oil Spill: More Taxes

There is a truism of government - you don't tax businesses, you tax their customers. Every tax placed on a business is passed along to customers in higher prices. So when a politician both claims "taxpayers will not pay for the BP cleanup" and that it will be paid with by higher taxes, be skeptical. Be very skeptical.

Lawmakers want to increase the current 8-cent-a-barrel tax on oil to make sure there is enough money available to respond to oil spills. At least 6 million gallons of crude have spewed into the Gulf of Mexico since a drilling rig exploded April 20 off the Louisiana coast.

President Barack Obama and congressional leaders have said they expect BP to foot the bill for the cleanup.

"Taxpayers will not pick up the tab," Senate Majority Leader Harry Reid, D-Nev., said Monday.

BP executives told Congress last week they would pay "all legitimate claims" for damages. But the government needs upfront money to respond to spills, as well as money to pay for cleanups when the responsible party is unable to pay, or is unknown. Money spent from the fund can later be recovered from the company responsible for the spill.
It is a good point that funds are needed for immediate work on the current spill. But we should all be aware this will mean higher prices at the pump for all of us. Especially heading into summer. Which will cause people to travel less, and depress the economy even more.

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