The Lone Ranger performs his duty and rides off on his trusty steed into the sunset at the end of the day. We are all familiar with the story.
Wisconsin state Rep. Bill Kramer, R-Waukesha, painted a modern-day lonely profile in the world of state politics when he gave Gov. Jim Doyle a little surprise during his budget address a few weeks ago.
While I would say it is common for the governor to garner applause after a particular policy announcement or emotionally stimulating bit of rhetoric, I doubt he expected a spontaneous and solitary interruption from the freshman Republican lawmaker—especially not while condemning the profits oil companies bring in every day.
At his budget address, Doyle proposed a 2.5 percent tax increase per barrel of oil to refund the state's transportation account, which is in a sorry state after his first term in office.
For 20 years, Wisconsin residents have paid an inflationary state tax on gas that increased annually. We finally paid our last annually increased tax last year at 32.9 cents per gallon, and the governor promised not to raise it again. But then the transportation fund lost $1.1 billion of its budget over the last four years because Doyle ""moved"" the funds elsewhere.
In order to make up for the shortfall, Doyle must find the funds somewhere, and seemingly decided oil companies are too easy of a target. Doyle promised this new tax on oil companies' profits will not appear at the pump, saying in the Milwaukee Journal Sentinel, ""I think, given the severity of the penalties and the enforcement unit we'll put in place, any oil company would run a very big risk in Wisconsin if they attempted to violate that law.""
Simple economics would disagree, because firms will simply increase prices to protect their profit as costs increase. It is rather naA_ve to think the state could institute an entire enforcement regime to watch and regulate the internal workings of oil companies.
Even assuming this tax will not hit the taxpayers, it is still unacceptable. Obviously, oil companies make a lot of money. In 2006, the five major oil companies reported a $6 billion profit increase from 2005—an all-time high—according to a recent analysis by the Wisconsin Department of Agriculture Trade and Consumer Protection.
Taxing companies simply because they haul in record profits does not make sense from an economic standpoint. Corporations do business to make money, and money leads to business expansion. This is a basic principle of economics.
Expanding business means more jobs and better returns for the individual investor. For oil companies in particular, expanding business also means investment in new technologies to find cleaner energy and sustainable technology.
In his State of the State Address, Doyle announced his plan to invest $40 million in renewable energy to tackle our dependence on foreign oil. But oil companies are already investing billions of dollars into research and development of alternative energy, so why not let them invest?
In fact, according to BP's website, it plans to invest $8 billion over the next 10 years to develop alternative energy sources. When we tax profits, we discourage this type of investment.
I would like to give Kramer some applause of his own. He was alone in recognizing that successful business is not inherently evil; rather, it indicates prosperity and can bring benefits to our society as well.
In a statement released after Doyle's budget address he said, ""I stood up to support the American spirit, the entrepreneurial can-do spirit Wisconsin and this nation as a whole embraces.""
The Wisconsin state Legislature will consider the budget in its upcoming deliberations and I can just hope that Kramer is not lonely anymore.
