Taxing Reality
Wednesday, February 28th, 2007Wisconsin’s governor wants to outlaw reality.
And by golly, if reality doesn’t cooperate, he’s going to fine the oil companies! Maybe imprison some oil executives! That’s how determined Governor Jim Doyle is about this.
Along with all the other new taxes he’s rooting for, Governor Doyle wants a fat new tax on oil companies. Well, that’s not original. But he not only wants that new tax, he wants to ban oil companies from “passing on” the tax to consumers. Huh?
No business can directly “pass on” each new cost it must bear. It’s competing with other firms, for one thing. Maybe a more efficient oil company will be able to sell barrels of oil a little cheaper than a competitor, though they have similar costs. Prices don’t just show up on the ticker tape. Nor do companies determine prices unilaterally. Prices are determined by supply and demand, with costs of production as only one major factor.
On the other hand, if a company doesn’t earn more than it spends, it eventually goes out of business. Firms do have to cover the cost of doing business, and in this sense costs are invariably “passed on” to customers. The alternative is operating as a charity. Or, I guess, begging the government for a subsidy to cover taxes the business is not allowed to regard as a cost. Even though they are a cost.
This reality stuff is hard. You can outlaw it, but it just won’t go away.
This is Common Sense. I’m Paul Jacob.










