Windfall Profits for DummiesNot to say I didn't warn you, but I told you so.
This is one strange debate the candidates are having on energy policy. With gas prices close to $4 a gallon, Hillary Clinton and John McCain say they'll bring relief with a moratorium on the 18.4-cent federal gas tax. Barack Obama opposes that but prefers a 1970s-style windfall profits tax (as does Mrs. Clinton).
Mr. Obama is right to oppose the gas-tax gimmick, but his idea is even worse. Neither proposal addresses the problem of energy supply, especially the lack of domestic oil and gas thanks to decades of Congressional restrictions on U.S. production. Mr. Obama supports most of those "no drilling" rules, but that hasn't stopped him from denouncing high gas prices on the campaign trail. He is running TV ads in North Carolina that show him walking through a gas station and declaring that he'll slap a tax on the $40 billion in "excess profits" of Exxon Mobil.
The idea is catching on. Last week Pennsylvania Congressman Paul Kanjorski introduced a windfall profits tax as part of what he called the "Consumer Reasonable Energy Price Protection Act of 2008." So now we have Congress threatening to help itself to business profits even though Washington already takes 35% right off the top with the corporate income tax.
So what did I say?
During the upcoming Presidential election, whenever you hear the Democratic candidate, or your left leaning friends, spouting off about how Evil-Exxon-Mobil made the largest profit ever in the history of greed, please feel free to remind them of this fact.For a little balance to what those pushing Windfall Profit taxes will tell you, check out these inconvenient facts:
Yes, Exxon may have made have made a profit in 2007 of $41 billion (an all-time record)...but it also paid $30 billion in taxes (also another all-time record).
So when the left complains that Oil company profits are "obscene", ask them if the think the related government profits are "obscene" as well.
"...over the past 25 years, oil companies directly paid or remitted more than $2.2 trillion in taxes, after adjusting for inflation, to federal and state governments — including excise taxes, royalty payments and state and federal corporate income taxes. That amounts to more than three times what they earned in profits during the same period, according to the latest numbers from the Bureau of Economic Analysis and U.S. Department of Energy."From 2007:
While they were recording record profits last year, they were also writing checks to Uncle Sam to the tune of $100.7 billion -- two and a half times what they made in net profit. In fact, previous Tax Foundation research found that from 1977 to 2004, federal and state governments extracted $397 billion by taxing the profits of the largest oil companies and an additional $1.1 trillion in taxes at the pump. In today's dollars, that's $2.2 trillion.From 2008:
In other words, just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers, which is 65,000,000 people! Further, the tax rate for the bottom 50% is only 3% of adjusted gross income ($27.4 billion / $922 billion), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).Here is a nice visualization (from 2005) of how government
You are now free to go back to your Democratic propaganda induced stupor of bitterness....