|December 15, 2005|
Dear Republican Presidential Hopefuls,
Iowans for Tax Relief works and speaks on behalf of all Iowa taxpayers, including our more than 50,000 members statewide. Our primary purpose is to limit government spending and taxes for the benefit of all. Responsible limits on taxes and spending help protect freedom, provide jobs, increase incentives and opportunities, control inflation, reduce interest rates, and achieve a better quality of life.
As part of our commitment to these principles, we write in strong opposition to any legislative attempt to resurrect the Windfall Profit Tax (WPT). WPT failed horribly during its first experiment in the 1980s. Investors' Action Foundation recently commissioned a study on the effects of WPT. Drs. Robert Shapiro and Nam Pham examined the results of the WPT over a five-year period and found reduced earnings on pension accounts. Because over 40% of oil company stocks are held in pension and retirement plans, retirees and those saving for retirement would feel the greatest impact. Taxpayers are not just drivers and consumers; they are investors.
A report by the non-partisan Congressional Research Service shows that the highly punitive tax on energy companies actually reduced domestic oil production by 3% to 6% in the years from 1980-1988 and increased oil imports by 8% to 16%. Less than ten years later the WPT had generated almost no revenue and was terminated.
There has also been talk of increased taxation on domestic oil companies. This would weaken our position in the global market which ultimately dictates our energy health. Domestic oil companies need to remain competitive among foreign companies like BP and Shell or the end result will be more dependence on foreign oil and higher U.S. oil and gas prices. This is more than just an impace at the pump; it is an economic impact costing jobs and creating national security vulnerabilities.
Instead, decision makers ought to focus on building and maintaining a diverse range of energy supply to help insulate us from short-term spikes in energy stocks and prices. This includes allowing access to additional energy sources and modernizing our nation's regulatory process to allow for faster refinery expansion. Although energy independence is not possible, taking steps to increase the supply of affordable energy is attainable.
As you consider a candidacy for President in 2008, we ask that you carefully
consider these issues when constructing your economic and energy policies.
This is a fundamental issue for Republican candidates; free markets should
be allowed to determine prices based on supply and demand. We will
continue to keep Iowa taxpayers informed of your positions on important
issues that impact them, including windfall profits tax.
David M. Stanley
|Edward D. Failor, Sr.
2610 Park Avenue * Muscatine, IA 52761
Phone (563) 288-3600 * Toll Free (877) 913-3600 * Fax (563) 264-2413 * firstname.lastname@example.org * www.taxrelief.org