Economist Mark Zandi: Big Oil Storm Profit Taxes Can Backfire

Some Democrats, Including recent Senator Ron WydenHas imposed a storm profit tax on oil and gas companies as a way to help consumers tackle record high gas prices — passing such a law can be a daunting battle. there is.

Earlier this month, Bharat Ramamurti, Deputy Director of the National Economic Council, said: Criticism of big oil The Biden administration has deposited huge profits in banks in the wake of Russia’s invasion of Ukraine, which accused the soaring gas prices.

“It’s ridiculous that oil and gas companies can make money by taking advantage of four times the profits they would have had in the absence of war,” Ramamulti told CNN in a telephone interview.

“Not only will energy companies invest less profit, but more importantly, they will create significant uncertainty about future profitability, which will discourage investment,” Zandy told CNN. “It will make them much less likely to invest in the long run.”

Zandy, an adviser to John McCain’s 2008 presidential election and a supporter of Hillary Clinton in the 2016 presidential election, said he understands why frustrated politicians are looking for a solution. rice field. “Low- and middle-income Americans are being crushed by rising gas prices,” he said.

But Zandy added, “No harm should be the first principle.”

His criticism is the same as that of former Obama economist Jason Furman, who recently told CNN Poppy Harlow that Democrats were “barking the wrong tree” in certain price cut proposals.

“If you punish a company every time this happens, you don’t want to expand your capabilities in a similar way,” Ferman said.

Last week, Weiden, chair of the Senate Finance Committee, imposed an additional 21% tax on excess profits of oil and gas companies that generate more than $ 1 billion in revenue.

“Our broken tax law works for big oil, not for American families,” Weiden said.