The Tax Foundation has a post that is interesting for two reasons. The first is that it outlines the absurdity of certain Democrats’ ideas about the energy industry and the second is that it points out the shenanigans of (D-PA) Rep. Paul Kanjorski, a person who I believe was instrumental in sparking some of the myths about Enron. The post:
The current high price of gas has led to a lot of crazy proposals from gas tax holidays to creating a tax deduction based upon energy consumption. But Rep. Paul Kanjorski’s (D-PA) may top them all in terms of its stupidity. From the Times Leader, Kanjorski’s plan would do the following:
• H.R. 5800 would tax industries’ windfall profits.
• The bill would set up a Reasonable Profits Board to determine when these companies’ profits are in excess, and then tax them on those windfall profits.
• As oil and gas companies’ windfall profits increase, so would the tax rate for those companies.
• Kanjorski said his legislation will encourage oil companies to lower prices to prevent them from receiving higher tax rates.
While Hillary Clinton may have failed ECON 101 along with John McCain, it appears as if Kanjorski may been enrolled in Marxism 450 at the time. In all honesty, nationalization of the oil industry (i.e. Venezuela) may be better than Kanjorski’s ridiculous proposal.
One can make a case for taxing that portion of the return to capital that comes from economic rents, but Kanjorski has probably never even heard the term. An economist who backed such a tax would understand that such a tax is not going to lead to lower prices at the pump, just as economists are setting the record straight on the current gas tax holiday gimmick. Furthermore, the justification for taxing economic rents would apply to all sectors, not just petroleum.
This post gave me some much needed insight into the thinking of this man, though I don’t like what I see. His idea that some companies should have “reasonable profits” and that he’s just the man to decide what a “reasonable profit” might be is downright horrifying – it shows he’s a socialist. Then of course, he’d tax the overperformance of the company – which shows he has no idea how to run a lemonade stand, much less a complex corporation.
Marxism, thy name is Kanjorski.
But his wild ideas about the present energy situation isn’t the only reason to be suspicious of the Pennsylvania Democrat. His Enron connection suddenly makes much more sense. On the morning of December 12, just ten days after Enron filed bankruptcy, the first congressional hearing into Enron’s collapse began. Paul Kanjorski was one of the first to speak. “I would like to learn more about the serious financial harm done to thousands of Enron employees,” he said. He said there had been press reports that employees had been blocked from selling their shares in retirement plans as the company descended into bankruptcy. Kanjorski said, “Those hard working Americans had to watch helplessly while executives could apparently sell their stock and avoid financial pain.”
Whether he really saw it in press reports or he just assumed it, Kanjorski created one of the most controversial and pattently untrue myths about Enron.
As my link describes, the Enron retirement plan was changing administrators. Employees knew this. They had been prodded to make any changes since October of that year; this ‘lockout’ was planned, announced, expected, and understood by employees. Furthermore, Dr. Lay bought Enron stock during this time. [Jeff Skilling had already left the company.] It is important to also note that employees were actually benefited during the Enron retirement plan lockout. The deal with Dynegy had been announced and the stock price more than doubled in those days. When the time came to sell, many bought.
In light of Kanjorski’s generally anti-energy position it’s simple to see why he chose to misinterpret the events in those very turbulent days after the crash of Enron. Furthermore, those “hardworking people” who had to “watch helplessly” would, under his plan for the Reasonable Profits Board, be locked out of funds that would go to bonuses, higher salaries, or better insurance. Instead, he would be the “Enron player” in this scenario and the employees would still be shafted – only this time, its by the government (ie, Kanjorski) instead of by a corporation. Apparently employees losing money is not the problem. The problem is who is on the receiving end of that particular odious transaction.