Granholm on Past Windfall Taxes Increasing Prices: We Prefer We Don’t Have to Impose One and It Won’t Hurt Production
On Thursday’s broadcast of CNBC’s “Closing Bell,” Energy Secretary Jennifer Granholm responded to a question on historical evidence from Europe and the U.S. that a windfall profits tax like the one floated by President Joe Biden would hurt production by stating that the “preference” is that companies lower prices or increase production without a windfall profits tax being imposed and that if a tax is implemented it would be designed to encourage more production.
Host Sara Eisen asked, “I guess what I’m wondering, though, is the windfall tax the way to do that? Haven’t we seen evidence in Europe and in this country back in the ’80s that that actually discourages companies from investing in production and just makes the shortages worse and the prices higher?”
Granholm responded, “Well, number one, again, the President’s preference is that the companies take this on without having to have Congress intervene. But number two, it is true that our European colleagues, many of whom have — at least part of the G7 — have adopted [a] windfall profits tax, in the — earlier in this country’s history, in the past couple of decades, it was tried here as an excise tax. A windfall profits tax, obviously, would be crafted to encourage production and — if it were to happen. But obviously, the President would work with Congress on what the shape of that is. But the point is, we need, at this moment, when there [are] historic profits being made, to be able to provide some relief to those who are at the pump and/or increase more in production, which we have not seen to the extent that, certainly, those profits would belie.”
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