windfall profit tax

knabe · Aug 1, 2008

team tax and spend is proposing a windfall profits tax on oil companies making 8% profit. microsoft makes 29% profit, yet no one complains about software prices.

http://www.taxfoundation.org/publications/show/1168.html

President Jimmy Carter signed the Crude Oil Windfall Profits Tax Act into effect on April 2, 1980.

The tax was imposed on the difference between the market price of oil and a government-determined base price.

As shown in Figure 2, the windfall profits tax was forecasted to raise more than $320 billion between 1980 and 1989. However, according to the CRS, the government collected only $80 billion in gross tax revenue ($146 billion in 2004 dollars). The net amount was actually less than this—roughly $40 billion—because the tax was deductible against corporate income.

CRS also found the windfall profits tax had the effect of decreasing domestic production by 3 percent to 6 percent, thereby increasing American dependence on foreign oil sources by 8 percent to 16 percent. A side effect was declining, not increasing, tax collections.

so of course, we are going to do communism better this time around because we are going to make it not deductible against corprate income.

NHR · Aug 1, 2008

Windfall profit taxes are one of the dumbest things I have heard. Domestically oil companies make $.08 per gallon sold and the government (federal and state (TX)) makes $.348 per gallon. Tell me who we should be doing away with?

By the way, the oil companies are not going to pay the tax, they are going to pass it on to the consumer through price increases. Anybody remember the gas lines of the Jimmy Carter days, what a fiasco.

BJN · Aug 3, 2008

Somebody give me an economics lesson. I read all the bs in the news, but I don't get it. I am looking for some explanation from an economic standpoint from someone who knows more than me.The oil companies (BP, Shell, etc.) make their money selling refined products (gasoline and diesel) to all of us. Crude oil (the input) goes up in price to historic levels and the price of gas and diesel (the product) at the pump follows. I understand so far. The oil companies are selling fewer units (gallons) to the American public because price has caused people to drive less. If the margin per unit of product sold has stayed the same, where are these record oil company profits coming from? It seems to me the oil companies should be making less because there are fewer gallons being sold and their input costs should be at all time highs.I realize oil companies do more than sell gas at the pump and they have other sources of revenue, but I would think that gas at the pump has to be their largest source of revenue by far. I could be wrong.In the cattle business, when my inputs (corn, hay, land) go up, my margins and profits go down. Why doesn't it work this way in the oil business?Maybe OUR government believes the oil companies are leaning us over and having their way with us?

NHR · Aug 3, 2008

The curveball in this equation is China. Chinas use of oil is skyrocketing which is taking more of the world supply. China has refineries to refine where in the USA we have not built any new refineries in 30 years. The screwball in the equation is the value of the US $ is cratering which is the reason that opec countries wont increase production because their payment in their currency has held steady.

Oil companies are not just domestic, most of their profit comes from international sources. Domestically the oil companies make very little because of the federal taxes and regulations.I am surprised that most oil companies have not relocated internationally yet.

Domestic Economics are hard enough, throw in International economies into the mix then you have a mess. One tax increase or misstep in federal policy could send us into nosedive of epic proportions. This is the reason I dont like NAFTA or any other Global economy scenarios, just to volatile.

GONEWEST · Aug 3, 2008

It's a reflection of the stupidity in this country that someone would vote for anyone who would even promote the idea. Doesn't logic tell anyone that a tax on the oil companies would just be passed along to us and it would be us that actually pays this tax???? I believe with all my heart that the oil companies are taking advantage of this situation to the absolute fullest as evidenced by the Exxon's last profit report. To profit $1500 per second goes beyond fair market practices. I believe that the oil companies should be tried for treason as they intentionally act in ways that are detrimental to the security of the country and its economy.

knabe · Aug 4, 2008

GONEWEST said:
I believe with all my heart that the oil companies are taking advantage of this situation to the absolute fullest as evidenced by the Exxon's last profit report.

who doesn't do this? what taxpayer doesn't do this?

record profit is due to consolidation allowed by congress. combine ten companies making 1 billion profit, combine them, get rid of redundancy, and you can make 10 billion, pay shareholders dividends, pay RECORD TAXES (which no one is mentioning, least of all obama) and you can also raise the compensation to employees.

sounds like a business to me.

Dusty · Aug 4, 2008

Why is that everyone hates it when someone else makes money. I am all for everyone getting as much as they can... Money that is.

knabe · Aug 4, 2008

Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes exceeding its after-tax U.S. earnings by more than $19 billion.

Oh, say, Berkshire Hathaway. Warren Buffett's outfit pulled in $11 billion last year, up 29% from 2006. Its profit margin -- if that's the relevant figure -- was 11.47%, which beats out the American oil majors.

Or consider Google, which earned a mere $4.2 billion but at a whopping 25.3% margin. Google earns far more from each of its sales dollars than does Exxon, but why doesn't Mr. Obama consider its advertising-search windfall worthy of special taxation?

The fun part about this game is anyone can play. Jim Johnson, formerly of Fannie Mae and formerly a political fixer for Mr. Obama, reaped a windfall before Fannie's multibillion-dollar accounting scandal. Bill Clinton took down as much as $15 million working as a rainmaker for billionaire financier Ron Burkle's Yucaipa Companies. This may be the very definition of "windfall."

democratic ticket.
kill job creators, wealth makers, and subsidize failure.

GONEWEST · Aug 4, 2008

Knabe,

I believe you should be a politician. You've began to do two things really well. You take a small piece of a post and turn it into something entirely different than its original intent. And you use percentages and statistics to spin your facts.

Assuming your academic background includes as much emphasis in statistics as I believe it would, you are aware that 50% of a hundred and 1% of a gazillion are far apart in value. You also have enough intelligence to know that to believe that Exxon actually paid more taxes than they put in their pockets would reflect the naiveties of a third grader. The statistic may be literally accurate, but it's derivative of corporate accounting and book work.

I am not for taxing anybody. I realize that living in this country is not a free ride and that we should all pay our share. However, the way that the government spends that money that I pay them so infuriates me to the point that I vote against any tax, no matter what level of government is trying to access it. And as I mentioned to tax the oil companies would only be another tax on the American public. I'm much more in favor for trying the CEO's for treason. The difference between Warren Buffet's profits, Googles, profits, or the ridiculous salaries of NBA players, is they don't take money from my pocket, they're profits aren't draining the economy of this country, their profits aren't a threat to national security. It's often mentioned that they only make 8 cents on a gallon of gasoline. They make a ton more on the oil in that barrel that's not used for gasoline.

But our government wants Exxon to make more than the last report of $1500 per second, because that is a huge windfall for the government!! It gives them billions more to waste, to pork away to their pet projects, to give away to those who don't appreciate it, to provide low interest rate loans to people who aren't even American citizens that American citizens can't even qualify for. This is why the government won't do anything about gas prices. This is why the Army has 28 Hummers that run on water and you drive a conventional combustion engine vehicle. You can't tax tap water and you can't tax a battery. The government NEEDS you to be dependent on oil because the taxes the oil company pays keep the government in business. They provide more money for them to waste and allows the role of government to grow bigger and bigger in our lives. Without the taxes on these huge profits, they would have to tax us at a rate that would certainly cause an upheaval that hasn't been seen since the revolution.

It'll be a cold day before I vote for Obama, but it doesn't look like that will matter. However that facts are that there are less jobs, more unemployment now than when Bush took over and the republicans controlled both houses, the wealth of the country has been placed into fewer hands, the middle class has shrunk substantially, wages have not kept up with inflation and subsidized failure is at an all time high. It's not just the democrats that suck.

Dusty · Aug 4, 2008

America has one of the highest corporate income tax rates in the world.... When Exxon makes money it is taxed. When they pay a dividend on the stock that the investor owns he pays taxes again. How fair is that??? Like Knabe said this country subsidizes failure and penalizes success. Big government actually helps big business. When government over regulates they produce barriers to entry into an industry. If I owned a chunk of ground that had a million barrels of oil under it and the money to drill the hole. I couldn't do it, the regulations would be a nightmare. I would have to lease it to Exxon or Royal Dutch and then get paid a royalty when and if they wanted to pump it out under their terms. Big business getting bigger because of big government.

Back at the turn of the century, which I consider the greatest days of American capitalism and entrepreneurship, people were scrambling to drill oil, build factories etc. These days were a prime example of what unbridled capitalism can do. It raises the standard of living and makes the people responsible for that change rich. Rockefeller, Carnegie, Vanderbilt, and the other "robber barons" made life better for everyone because they could get rich doing it.

The majority of democrats in this country are the super rich and the super poor. The super rich have so much money and they don't necessarily have regular income subject to tax so they don't care what the income taxes are. The super poor want high income taxes because they want more entitlement programs to give them the things that they don't want bad enough to go out and get for themselves. Who pays for it? The people that earn a regular income(the middle class). Mostly the people that earn over 100K a year. An average family pulling down 50K really doesn't pay much in taxes. The highest one percent of income earners in this country make 20 percent of the income. There is nothing wrong with this in that I imagine these one percent of people probably are responsible for more than 20% of this nations prosperity. But, however this group of people that makes 20% of the income pays 40% of the taxes!!!! How is that even remotely fair?

High income taxes are a big reason why the rich get richer. A 40 or 50% federal income tax rate makes it impossible for anyone that is not rich already from becoming rich. This is why the rich, especially the rich that inherit their money (the Kennedy's) are big democrats because it makes them feel good and the high taxes don't hurt them as much as the middle class guy working 70 hours a week trying to get ahead in this world. A lot of wealthy democrats don't know what it takes to get to the position that they inherited from their parents.

Neither candidate, McCain or Obama knows crap about economics. They don't even know the common economic principles that are taught in macro-econ 101 at BFE Community College. Ron Paul was probably the best candidate when it came to economics and what the government's role should be, but yeah see how long he lasted.

America is at that awkward stage as far as societies go, the system(government) is broken, but it's not quite to the point where we start shooting them yet.....

knabe · Aug 4, 2008

GONEWEST said:
Knabe,

I believe you should be a politician. You've began to do two things really well. You take a small piece of a post and turn it into something entirely different than its original intent. And you use percentages and statistics to spin your facts.

i don't know whether to take this as a compliment or count the ways you agreed with what i said.

Assuming your academic background includes as much emphasis in statistics as I believe it would, you are aware that 50% of a hundred and 1% of a gazillion are far apart in value. You also have enough intelligence to know that to believe that Exxon actually paid more taxes than they put in their pockets would reflect the naiveties of a third grader. The statistic may be literally accurate, but it's derivative of corporate accounting and book work.

so, it sounds like you are for a progressive tax. what are the cutoffs?

I am not for taxing anybody. I realize that living in this country is not a free ride and that we should all pay our share. However, the way that the government spends that money that I pay them so infuriates me to the point that I vote against any tax, no matter what level of government is trying to access it. And as I mentioned to tax the oil companies would only be another tax on the American public. I'm much more in favor for trying the CEO's for treason. The difference between Warren Buffet's profits, Googles, profits, or the ridiculous salaries of NBA players, is they don't take money from my pocket, they're profits aren't draining the economy of this country, their profits aren't a threat to national security. It's often mentioned that they only make 8 cents on a gallon of gasoline. They make a ton more on the oil in that barrel that's not used for gasoline.

i am for taxing everyone, especially the 40 million wage earners who pay NO federal income tax, as this will enhance their scrutiny on how their money is spent.

But our government wants Exxon to make more than the last report of $1500 per second, because that is a huge windfall for the government!! It gives them billions more to waste, to pork away to their pet projects, to give away to those who don't appreciate it, to provide low interest rate loans to people who aren't even American citizens that American citizens can't even qualify for. This is why the government won't do anything about gas prices. This is why the Army has 28 Hummers that run on water and you drive a conventional combustion engine vehicle. You can't tax tap water and you can't tax a battery. The government NEEDS you to be dependent on oil because the taxes the oil company pays keep the government in business. They provide more money for them to waste and allows the role of government to grow bigger and bigger in our lives. Without the taxes on these huge profits, they would have to tax us at a rate that would certainly cause an upheaval that hasn't been seen since the revolution.

i agree, we are almost there.

It'll be a cold day before I vote for Obama, but it doesn't look like that will matter. However that facts are that there are less jobs, more unemployment now than when Bush took over and the republicans controlled both houses, the wealth of the country has been placed into fewer hands, the middle class has shrunk substantially, wages have not kept up with inflation and subsidized failure is at an all time high. It's not just the democrats that suck.

i won't vote for obama on the coldest day. there are fewer chronic homeless people today. i agree bush is part of the problem. i didn't vote for him either time, and the last time, i wrote myself in. and, republicans AND democrats suck, that's why there's this word/s republicrat/demican. it will be a cold day before the press compliments bush on anything. the only orgainization more pompous than a politician is the media.

windfall profit tax

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