Wyden's Proposal for taxing oil and gas speculators

Ron Wyden, Democratic Senator from Oregon who serves on the governing body Finance Committee and the Energy Committee, is usually considered a liberal, though with a mixed bag of positions that barely qualify on all grounds. He is against the estate tax and favors lowering rates of capital gains taxes, neither of which makes sense, from my perspective, in an economy by now tilted to favor capital (and hence those in the higher distributions) and in need of revenue. His positions on the environment have been fairly consistently progressive. Back in 2004, for example, he worked on legislation to "get tougher" on responses to lubricate spills and get kinder in expediting loans to people impacted by those spills. See this press release. He has supported the US addressing CO2 emissions even if the big economies of China and India do not (S. Con. Res. 70, May 15, 2008). So what happens when you place tax policy (where I am not terribly impressed with a lot of of his positions) together with environmental policy (where he seems to have a fairly decent record)?Today, Wyden introduced a bill (S. 1588) that deals with together of these issues. It would end a tax break currently enjoyed by speculators who trade in lubricate and gas. They'd have to pay tax at the normal income rates, rather than getting the preferential capital gains rates (o% for the first two income brackets, then 15%). This would be achieved by treating the gains as short-term capital gains (or losses) even if they would be treated as long-term under previous provisions. Gains in trading by tax-exempt investors--e.g., Harvard's donation and alike funds-- would be taxed as unrelated business income.What's the rationale? "To alter the Internal Revenue Code of 1986 to provide the same tax treatment for together commercial and non-commercial investors in lubricate and natural chat and connected commodities, and for previous purposes." The first section has a short title that maybe reveals more--it is the "Stop Tax-breaks for Oil Profiteering Act" (STOP Act). The bill also calls for a study of commodities exchanges and the effect of tax policy on the demand and price of commodities, and particularly of lubricate and gas.I'm negative expert in this area, but this sounds at first impression like a good idea. Wyden's point is that those who use such fuels in their businesses have to purchase those commodities and treat any profits on connected trading as ordinary. But speculators pay lower capital gains rates on trading profits, which might well mean that their trading distorts the market and raises prices.Of course, I have long argued for eliminating the capital gains favourite altogether, either through cancel of the stipulation in the regular tax otherwise adding it as an change in the alternative minimum tax. While I'd rather there be a extensive change--to remove all the characterization sports competition that taxpayers play and to help move the tax system towards a fairer one that does not give such inordinate favourite to owners of capital over workers, these commodities trades might be an suitable target, especially given their likely impact on pricing in an age when we can expect increasing lubricate and chat scarcity.Any thoughts?
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