Barack Obama said yesterday that he wants to impose a “windfall profits tax” on American oil companies. This is a stupid idea, unless you want to reduce the supply of oil and thereby increase prices even further.
But it did cause me to wonder why we don’t have a windfall profits tax on authors. Think about it: it takes as much work to write a 300-page book that sells 1,000 copies as to write one that sells 1,000,000. Yet the former author is paid almost nothing, while the author who happens to write a best-seller gets rich. Where is the fairness in that? Besides, the oil companies need their profits to make huge capital investments in oil drilling equipment, ocean platforms, pipelines, and so on. What capital investment does an author need his windfall profits in order to make? A new pencil? An author could easily pay extra taxes on his windfall profits and have plenty of capital left over for his next book.
A windfall profits tax on authors seems like a no-brainer. Coincidentally, Barack Obama’s 2007 income of around $4.2 million came almost entirely from book royalties. Now, that’s what I call a windfall! If authors’ windfall profits are taxed at 90%, Obama can write a check to the Treasury for around $3.2 million. What do you say, Barack? Why not a windfall profits tax on authors?