President Barack Obama’s budget plan for a $10 tax on every barrel of oil has already run into intense opposition in Congress as lawmakers look to prevent the president from imposing a $65 billion tax hike on Americans.
Lawmakers are reacting to two new reports detailing how Americans would likely be made worse off by a $10 tax on barrels of oil. Energy experts argue the tax would be passed onto consumers, making energy more expensive.
The Congressional Research Service (CRS) and the free market Institute for Energy Research (IER) have both put out research on what taxing oil would do to energy prices, and the outlook is not good for anyone who relies on oil — hint, that’s everyone!
“Since it is likely that the oil fee would be shifted forward by the oil companies, and since petroleum products enter into many products, consumers will likely see higher prices, not only directly for gasoline and other consumer products, but, in general, for many products to varying degrees,” CRS reported Tuesday.
“In general, the fee would likely result in decreased discretionary consumer purchasing power which may translate into lower expected economic growth,” Congress’ research arm wrote.
IER’s report was less circumspect about taxing oil, and argued “you don’t make it faster, easier, and cheaper to move products by imposing a huge tax on the thing that moves them — oil.” IER economist Robert Murphy concluded Obama’s oil fee amounts to a $65 billion a year tax on Americans.
“And you don’t create good paying jobs with a $65 billion annual tax hike, the proceeds of which are used to fuel boondoggle spending projects on items that wouldn’t survive in the open market,” IER stated. “The whole episode shows the foolishness of striking deals with carbon tax proponents in the hopes of gaining smaller and more efficient government.”
Obama’s 2017 budget proposal calls for a $10 tax on oil barrels to pay for green transportation projects. The president has sold this as a sort of second stimulus program to “drive new jobs, new industries, and a new understanding of the world around us.”
But Obama’s oil tax needs congressional approval, which he’s not likely to get from a Republican-controlled Congress.
“We won’t let that happen. Instead, we will focus on developing ideas to maximize our energy resources, not tax them and keep them in the ground,” House Speaker [crscore]Paul Ryan[/crscore]’s office responded to Obama’s oil tax plan Monday.
Ryan and other House Republicans have come out against Obama’s oil tax, noting that not a single Democratic leader has come out in support of taxing barrels of oil. Republicans are worried this would make life harder for Americans, especially the poor, who depend on cheap gasoline every day.
“That’s how we’ll grow our economy and make America confident again,” the Wisconsin Republicans’ staff wrote.
Republicans see this tax, like Obama’s moratorium on federal coal leases, as another attack on U.S. energy producers. And the attack couldn’t have come at a worse time for oil companies — many of which are financially struggling.
But it’s not oil companies that will ultimately pay the tax — consumers will.
“This is a massive new tax which would significantly burden the U.S. economy, no matter how it is levied. The fact that it is directly applied to all—meaning it would spill over into the prices for motorists—rubs salt in the wound, as this massive hit would fall disproportionately on the poor and middle class,” Murphy wrote.
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