Yes, Obama wants to tax windfall profits

As the candidates jockey over energy policies and offshore drilling, Sen. John McCain has been criticizing Sen. Barack Obama for wanting to raise taxes.

"He wants a windfall profits tax on oil, to go along with the new taxes he also plans for coal and natural gas," McCain said in a June 18, 2008, speech in Houston. "If the plan sounds familiar, it's because that was President Jimmy Carter's big idea too — and a lot of good it did us."

Indeed, McCain is right that Obama supports a windfall profits tax, which would be levied on oil companies to capture some of their profits from rising prices.

"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," Obama said in a speech June 9.

A windfall tax — actually an excise tax imposed on the difference between the market price of oil and an adjusted base price — was enacted in 1980 but repealed in 1988. By then, oil prices had dropped, it was generating little or no revenue and there were concerns that it made the United States more dependent on foreign oil. Many Democrats want to bring it back to discourage oil companies from raising prices.

We couldn't find many details about Obama's windfall-profits proposal except that he would use it for the Low Income Home Energy Assistance Program, which helps the poor pay their heating and cooling bills.

As for the other part of McCain's claim, that Obama wants new taxes for coal and natural gas, the details are more sketchy.

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The McCain campaign cites a February 2008 interview of Obama with San Antonio Express-News columnist Carlos Guerra. In that interview, Obama first answered a question about funding sources for education. Guerra then asked, "Have you considered other funding sources, say taxing emerging energy forms, for example, say a penny per kilowatt hour on wind energy?"

Obama replied: "Well, that's clean energy, and we want to drive down the cost of that, not raise it. We need to give them subsidies so they can start developing that. What we ought to tax is dirty energy, like coal and, to a lesser extent, natural gas. But I think that the real way to fund education is for local communities to step up and say this is important to us. There are no shortcuts."

We couldn't find any other references to new taxes on coal or natural gas on the Obama's campaign Web site, although we found several items where Obama wants incentives for clean coal.

Tommy Vietor, a spokesman for the campaign, said Obama was referring to his proposal for a cap-and-trade system for global warming.

Still, it's clear from the context that the coal and natural gas comment was more an aside than an announcement of a major new tax proposal. But regardless, Obama said what he said: "What we ought to tax is dirty energy, like coal and, to a lesser extent, natural gas."

He may not have a detailed position paper on it, but it seems to be an overall statement of his beliefs and the Obama campaign did not dispute that he said it.

So we find McCain's claim to be Mostly True.