COMMENTARY | Touted as “taxation of the rich,” the Obama administration pushes forward with the proposal of a new set of taxes on the American people. With public support reported as highly in favor of the new taxes, it would seem that the majority of Americans are counting on the tax not touching their own pockets. Perhaps this misperception is intentional, or possibly just an oversight, but average Joe Public should prepare for an immediate impact if these taxes are imposed.
Centering their cross-hairs on Big Business and the Million Dollar Club, the Obama Administration has clearly fired a shot aimed to garner the support of those who are not pointedly targeted by the tax increase. Perhaps the seemingly safe middle-class should take a closer look, and even the low-income should brace for impact surely to result from the cause and effect relationship of taxation.
With any business, whether they make widgets or get paid to transport those widgets from Point A to Point B, taxes are treated as a cost of doing business. This cost, as all others, is passed directly to their customers in the form of the price charged for the good or service received. Essentially, no business can be taxed, ever. While this seems unfair, it is simply a principle of capitalism.
By aiming to tax the Oil & Gas industry, the Obama Administration will certainly cause an increase in the price at the pump. As fuel prices rise, the prices of virtually all goods will rise due to transportation cost increases, and as with any other cost, this too shall be passed to consumers.
Specific targeting of the Oil & Gas industry for additional taxation seems especially troubling, as such increases in costs will be felt across virtually all segments of the economy, while netting very little in the way of additional revenue. A valid argument could be made that such taxation could potentially prove to have a net negative effect on tax receipts within a relatively short period of time, due to a loss of consumption.
More at the pump, more at the grocery store, more taxes seem inescapable, no matter which segment of the economy your personal income level falls into. When describing his tax plan to the public, President Obama would do well to remember that not just millionaires drive cars and even those at or near the poverty level still need to eat.