Bernie Sanders and Hillary Clinton spent about a quarter of Thursday night’s debate arguing over the definition of “progressive,” and whether it applied to each of them. If you came away thinking it involves a lack of understanding of how the real world works, then you were not surprised earlier in the day when President Obama proposed a new $10-a-barrel tax on oil.
The administration cast the tax as one that would be “paid by the oil companies,” a fantasy that ignores the hard reality that all business taxes are eventually passed on to someone: workers in the form of lower wages, consumers in the form of higher prices (the most likely option here), and/or investors in the form of lower returns. To the extent it discourages oil production, it could also have a disproportionate effect on oil and gasoline prices beyond the estimated 25-cents-a-gallon the tax would cost U.S. motorists at the pump.
Thus, the tax is perfectly in keeping with the “progressive” belief that all sorts of wonderful things can be funded with higher taxes only on business and “the rich.” When Sanders says he’ll fund “free” college tuition with taxes on Wall Street “speculation” — which, based on his comment Thursday night that “the business model of Wall Street is fraud,” would have to include all stock transactions — he not only ignores that this tax, too, will be passed on to consumers. He also ignores that more than half of Americans have investments in the stock market, through such programs as 401(k)s and IRA, not to mention 529 plans for … college savings. These are the families that will bear the burden of that tax, just like Obama’s oil tax. In those European countries to which Sanders points as examples of places that have the government programs he wants here, middle-income workers pay far higher taxes than their American peers. That’s one reason their tax codes are rated less progressive than ours.
The oil tax would, however, be a way to achieve a longtime left-wing goal of crippling fossil-fuel companies. Oil companies have suffered of late as demand has softened while supply keeps increasing. They’re no small part of the rout in equity markets worldwide over the past month-plus. So, naturally, Obama wants to pile another weight on top of them while they’re down. This is at least as ideologically driven as any of the Republican proposals the president and his would-be “progressive” successors have panned.