Taxpayers and State Pensioners Pay the Price for Energy Tax Proposal
Posted on: Thursday, 23 February 2006, 12:00 CST
ALBANY, N.Y., Feb. 23 /PRNewswire/ -- The retirement assets of New York's firemen, nurses, teachers, police officers, and other public servants will be significantly and adversely affected by the "Windfall Profits Rebate Act of 2005," a new study has found. The study, prepared by Robert J. Shapiro, undersecretary of Commerce in the Clinton administration, and professor Nam Pham, was released today by the Investors Action Foundation.
The windfall profits tax now under consideration by Congress targets U.S. oil and gas companies, and, according to the new study, stands to cost the average pensioner as much as $5,465 in future gains over the next five years. A previous study by Shapiro and Pham established that U.S. retirement accounts and pension funds currently hold 41 percent of the shares of these companies. The new study found that public employee pensions alone hold approximately 10 percent of their assets in domestic oil and gas stocks, making them particularly vulnerable to the tax's negative impact.
The study examined the tax's projected effect on 28 million accounts in more than 2,650 federal, state and local public employee pension funds. For New York, the authors concluded that the tax, if passed, will reduce future dividend payouts and capital gains earned by these funds by between $301 million and $2.8 billion a year, depending on oil prices, that places New York among the top ten states for highest future costs.
The study further found that the proposed windfall profits tax would discourage industry investment and thereby reduce future production. "It's counterproductive at a time when the U.S. is focused on diversifying energy sources and reducing dependency on foreign oil," said Shapiro.
The windfall profits tax imposed on the oil industry in 1980 drove down domestic oil production by 3-6 percent and increased imports by 8-16 percent, according to the Congressional Research Service.
The Investors Action Foundation-sponsored study examined the windfall tax's impact on pension plans at five oil price thresholds. It found that the proposed tax could cost the average state or local pension held by some 17 million Americans today thousands of dollars in future gains.
The entire study can be accessed by visiting http://www.windfallprofitstax.org/
Investors Action Foundation
CONTACT: Darren Brandt, +1-212-446-1861, for Investors ActionFoundation
Web site: http://www.windfallprofitstax.org/
Source: PRNewswire
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