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Politics : President Barack Obama
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To: zeta1961 who wrote (19688)4/30/2008 2:52:52 PM
From: DismalScientist  Read Replies (3) of 149317
 
Hillary said: We will pay for it by imposing a windfall profits tax on the big oil companies," she said on Tuesday. "They sure can afford it. This is a big difference in this race. My opponent opposes giving consumers a break from the gas tax but I believe the American people are being squeezed pretty hard."

Let me apply the same simple analysis I teach my students. When you tax something you reduce the incentive to engage in the activity taxed. So, reducing the tax on consumers will increase their incentive to consume, i.e, increase their demand. When we increase the tax on oil companies, that will decrease their incentive to supply oil. Now, any of my students who did not know that increasing demand and reducing supply will result in higher prices would not have passed my course or, for that matter, any economics course.

I have to believe that Hillary knows better, but is just pandering. I'm not so sure about McCain.
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