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Palin's Oil Tax Heresy?


All of this should be anathema to economic conservatives, who cry class warfare whenever Democrats broach the topic of windfall profits taxes. (McCain took Obama to task when the latter proposed a national windfall tax earlier this summer.) But it isn't. Two of the most prominent economic conservatives, in fact, twisted their logic to defend Palin's oil tax when I reached them earlier this week. "Rather than have the government spend [the tax revenue], they give it back to the people," Grover Norquist, President of Americans for Tax Reform, told me. Given the fact that the state is taxing corporations for a quarter of their profits, the argument goes, it's better to give that revenue back to individual taxpayers than for the state to keep it. That's a neat formula--once you get past the fact that Palin initiated the massive tax increase in the first place.

Stephen Moore, former president of the Club for Growth and editorial board member of the Wall Street Journal, expressed reservations about Palin, but nevertheless recounted a standard defense of her tax increases. "There's an allegation--more than an allegation--that the oil companies nearly bribed the members of the legislature to get sweetheart deals on these royalties," he said. "When Palin was elected as part of this anti-corruption crusade, she basically renegotiated the deal and got a better deal for taxpayers." But if you take this argument to its logical next step, then tax increases can be justified as a corrective measure for corporations' campaign contributious to legislators, which artificially deflate corporate tax rates. So would fiscal conservatives be comfortable with Congress introducing massive profits taxes on every oil, pharmaceutical, and insurance corporation in the country? Don't oil corporations try to buy the same influence in Congress as well? Moore just laughs. "Well, I guess you could say they do."

Norquist explains away Palin's windfall tax by citing geographic differences. "Alaska is like Louisiana in that it's not like any other state," he says, later adding that "what they have is a resource-based economy, which the rest of the world doesn't have." This tolerance for the high tax status-quo seems strange coming from a person who famously said he wanted to shrink the federal government "down to a size where we can drown it in the bathtub." 

Perhaps Norquist's most straightforward defense is the most sincere: "Economic conservatives like babes, too."

--Eric Zimmermann