Taxing in Wisconsin, Pennsylvania: No Can Do

By April 24, 2007General

Back to the recurring topic of the overreaching, revenue-grasping governors of Wisconsin and Pennsylvania, who think tax increases on oil companies can be made politically appealing by forbidding the companies to pass the additional costs onto consumers. (More than forbidding: Making it a crime!) Of course, absent expropriation it’s difficult for government to achieve that level of control over a company’s activities, but populism emits a powerful lure.

At any event, kudos to AP’s business writer in Harrisburg, Marc Levy, for reporting facts and context that should stanch that stink.

HARRISBURG – To Gov. Rendell, it could be a golden goose: a state tax on oil company profits that could not, by law, affect the price of gas at the pump.

Wisconsin Gov. Jim Doyle is floating a similar idea for tapping into an industry whose top five companies rang up more than $100 billion in profits last year.

The only problem: Tax lawyers and accountants say a tax with a pass-through prohibition would never work, because the price of gas is dictated by a broad range of variables.

“How are they going to know whether somebody who labels some increase in cost as transportation, or as crude, or as refining, is in fact passing on a tax? You tell me,” said Walter Hellerstein, a professor of taxation at the University of Georgia Law School in Athens. “Maybe there’s really smart people in Pennsylvania who can do that, I don’t know.”

Kill the bills, now, please, before their policy malodor spreads.