The Truth Behind Wisconsin's Oil Company Tax: Why You'll Pay More at the Pump

As we know, Governor Doyle has proposed a tax on "big oil." The legislation would prohibit the oil companies from passing the tax on to consumers. It does not work.

You knew it. I knew it. People in other parts of the country knew it (and wrote about it). Everyone with a brain knew it.

So did the Governor (but, as is his habit, he told us differently).

From a January 30, 2007 memo delivered to the Governor's office that was prepared by Governor Doyle's own Department of Revenue:

Arbitrary Nature of Audits
Sec. 77.9982(4) provides that no supplier shall take any action to increase or influence the selling price of motor vehicle fuel in order to recover the amount of the assessment. A supplier could argue that any number of factors other than oil company assessment were the cause of a price increase. Prices are determined by a complex, interdependent set of economic factors. The Department's auditors may have no rational basis to isolate the cause of a price increase as the oil company assessment. The supplier may recover the assessment from purchasers by a gradual increase in the price and in some cases may not be able to bread down all the reasons why the price is increased. Therefore, actions to penalize suppliers for passing the tax through to purchasers may not be sustained.