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More on "windfall" profits theft

Texan

Well-known member
It's Unwise To Tax 'Well-Earned' Profits

By MARGO THORNING | Posted Monday, August 25, 2008 4:20 PM PT

There are certain laws you can break without serious repercussions, but the laws of economics are far less forgiving. And history shows that we will all pay a hefty fine if lawmakers choose to enact a "windfall" profits tax as House Speaker Nancy Pelosi has just proposed and Democrat presidential candidate Barack Obama supports.

Talk of a "windfall" profits tax turns up, like a bad penny, when politicians catch on that Americans have become frustrated by high gas prices. The concept is simple: Politicians, who are no more popular than high energy prices right now, see an easy scapegoat. So they slap an extra tax on the "bad guy" and take a bow.

The concept's proponents must be credited for their shrewdness.

Indeed, even calling it a "windfall" tax implies that people or firms have not rightly earned that money.

In a bill earlier this year, 51 senators voted to impose a massive new special tax on energy companies whose profits grew by more than 10% — hardly a "windfall" by most definitions.

As columnist Jonah Goldberg argues, "If we were honest with the people having their profits yanked away, we'd call it the 'well-earned and richly deserved profits tax.' " Many are not so forthcoming.

In this rags-to-riches story, it seems like no party has profited more from the recent high energy prices than the federal purse. The Wall Street Journal recently reported that one oil "giant" paid nearly $65 billion in U.S. taxes from 2003 to 2007, "exceeding its after-tax U.S. earnings by more than $19 billion."

Unfortunately for proponents of sound policy, windfall profits are more satisfying emotionally than they are economically.

American households and business are rightly frustrated by the high cost of energy, but will punishing the oil industry with higher taxes do anything to make prices fall? Most experts believe that is not likely for a number of reasons.

First, America's oil-producing firms are price takers, not price makers, in a global market. They are not members of the price-fixing body, OPEC, whose oil production decisions influence the world market supply.

The price of a barrel of oil, like most commodities, is set on the international markets by traders making sales between willing buyers and willing sellers.

Second, we tried a windfall profits tax from 1980 to 1988. A report by the nonpartisan Congressional Research Service concluded that this tax reduced domestic oil production by 3% to 6% and increased oil imports in the range of 8% to 16%. History has shown that a windfall profits tax increased U.S. dependence on foreign oil. It would do so again if repeated.

This real-life history proves the economic theory for why windfall profits negatively impact progress toward cheaper gas and increased supply of alternative fuels.

Rising oil prices encourage companies to invest more in finding new reserves and to increase production from existing fields. Increasing taxes on oil company revenue will only reduce the desire and ability of firms to find and produce more oil.

One of the axioms of scholars of the public finances is that if you tax something, you get less of it.

A windfall profits tax, by reducing capital available for investment in future energy production, will lower future energy production and therefore lower government revenues into the foreseeable future.

Reinstituting the windfall profits tax on oil companies will only reduce the amount of money companies can plow back into finding more oil and reduce the return to shareholders.

A more serious and useful approach for bringing down high energy prices would consist of several steps:

• Free up more locations — offshore and onshore — for domestic exploration and development to help increase supply.

• Revise the federal tax code to increase the speed of capital cost recovery for new investment.

• Reduce the corporate tax rate to give companies more funds for capital expenditures.

• Fund the provisions in the 2005 Energy Policy Act aimed at increasing energy supplies, encouraging conservation and promoting renewable energy sources.

• Work with developing and emerging economies to promote economic freedom, the rule of law and the sanctity of contracts.

In the long run, these steps would gradually enhance energy supplies, reduce demand for energy, and relieve the global pressure on energy prices.

That's a real plan for reducing American's high energy cost frustrations.



Thorning is chief economist at the American Council for Capital Formation.



http://ibdeditorials.com/IBDArticles.aspx?id=304558228573095
 

RobertMac

Well-known member
One of the axioms of scholars of the public finances is that if you tax something, you get less of it.
Want less OPEC oil, increase the tax on it.

Free up more locations — offshore and onshore — for domestic exploration and development to help increase supply.
Increase supply to lower prices.

• Revise the federal tax code to increase the speed of capital cost recovery for new investment.

• Reduce the corporate tax rate to give companies more funds for capital expenditures.
Why? They are making record profits and consumers pay all taxes anyway!
 
A

Anonymous

Guest
RobertMac said:
One of the axioms of scholars of the public finances is that if you tax something, you get less of it.
Want less OPEC oil, increase the tax on it.

Free up more locations — offshore and onshore — for domestic exploration and development to help increase supply.
Increase supply to lower prices.

• Revise the federal tax code to increase the speed of capital cost recovery for new investment.

• Reduce the corporate tax rate to give companies more funds for capital expenditures.
Why? They are making record profits and consumers pay all taxes anyway!

And the Cheney/Big Oil negotiated backroom secret energy policy of the past 7 years of the Bush/Cheney reign has been such a great stunning success :???: :wink: :(

National average Gas prices went from $1.49 when Bush took office in 2000- to $2.50 in 2006- to a record high $4.15 on 7/7/08....Its still $3.99 a gallon up here...
Yep- Thank You George-- you've got quite a well planned succesful energy policy.... :roll: For the Oil Companies and your Oil CEO buddies... :( :wink:
 

RobertMac

Well-known member
OT said:
And the Cheney/Big Oil negotiated backroom secret energy policy of the past 7 years of the Bush/Cheney reign has been such a great stunning success
You keep posting like that and the black helicopters are going to come pick you up...or would that be the guys in the white coats with the sleeveless jacket?!?!?! :roll: :???: :roll: :shock: :lol: :lol:

Energy policy for the last thirty years has been Sierra Club Democrat policy...blocking development of USA resources has led to our dependence on OPEC oil. These high energy prices are exactly what the Dems want and are spinning this to blame the oil companies...and a lot of fools are buying into it!!!!!!!!!!!!!! :shock: :roll: :shock: :roll:
Make no mistake about it...the Democrat party wants to destroy the oil industry!

But, TSR, where is the government going to replace the BILLIONS OF DOLLARS OF TAXES THEY PAY???????????????????? :shock: :???:
 

Mike

Well-known member
RobertMac said:
OT said:
And the Cheney/Big Oil negotiated backroom secret energy policy of the past 7 years of the Bush/Cheney reign has been such a great stunning success
You keep posting like that and the black helicopters are going to come pick you up...or would that be the guys in the white coats with the sleeveless jacket?!?!?! :roll: :???: :roll: :shock: :lol: :lol:

Energy policy for the last thirty years has been Sierra Club Democrat policy...blocking development of USA resources has led to our dependence on OPEC oil. These high energy prices are exactly what the Dems want and are spinning this to blame the oil companies...and a lot of fools are buying into it!!!!!!!!!!!!!! :shock: :roll: :shock: :roll:
Make no mistake about it...the Democrat party wants to destroy the oil industry!

But, TSR, where is the government going to replace the BILLIONS OF DOLLARS OF TAXES THEY PAY???????????????????? :shock: :???:

Relax, Robertmac. OT's game is as obvious as the nose on one's face.

There is no way anyone could believe those things. It's a game he plays to stir controversy.

Without the back and forth banter, this place would be as dead as a church sanctuary on Saturday night.

Stupidity to that degree is not possible. :roll:
 

Larrry

Well-known member
Ot 's reasoning leaves a lot to be desired. It would be like OT not letting his wife go to the grocery store and then complaing and blaming the reps for not having any groceries in his fridge.

I wonder if those fruits in Denver make OT proud of his party and his socialist values.
 

TSR

Well-known member
RobertMac said:
OT said:
And the Cheney/Big Oil negotiated backroom secret energy policy of the past 7 years of the Bush/Cheney reign has been such a great stunning success
You keep posting like that and the black helicopters are going to come pick you up...or would that be the guys in the white coats with the sleeveless jacket?!?!?! :roll: :???: :roll: :shock: :lol: :lol:

Energy policy for the last thirty years has been Sierra Club Democrat policy...blocking development of USA resources has led to our dependence on OPEC oil. These high energy prices are exactly what the Dems want and are spinning this to blame the oil companies...and a lot of fools are buying into it!!!!!!!!!!!!!! :shock: :roll: :shock: :roll:
Make no mistake about it...the Democrat party wants to destroy the oil industry!

But, TSR, where is the government going to replace the BILLIONS OF DOLLARS OF TAXES THEY PAY???????????????????? :shock: :???:

The government will find some way to replace those taxes or else do without them by, as you and others have suggested cutting spending. That's what they are doing now aren't they? And I am not referring to the cutting spending part. I mean the big oil companies are getting tax breaks already, compliments of our government, while other countries are charging them a lot more tax than what our country does. Boy I love helping those giant corporations by giving them those tax breaks so they can move those jobs overseas or use those tax breaks to help fund those higher taxes levied by foreign countries. Whatever we do, lets don't rescind those breaks and give them to smaller companies that don't relocate overseas (and which btw also pay taxes, many, many, small might equal 1 giant) and keep everything right here in America. No lets leave everything the way it is. America isn't a lucrative market for any corporation anyway is it. :? :? :???:
 

mrj

Well-known member
TSR, do you really fail to understand that those increased taxes will be passed along to US, the customers who NEED that fuel????

Or, that oil is the fuel of private enterprise and democratic nations???

Or, that SUPPLY AND DEMAND are driving the price of oil higher because more third world nations are growing their economies and demanding (buying) more oil? Especially diesel fuel. And THAT is what's keeping fuel prices high!

But the real reason for the USA having such a shortage of our own fuel is the abject failure of Congress to stand up to enviro-extremists, in fact catering to them by blocking production of more oil and refining adequate amounts of fuels right here at home.


mrj
 
A

Anonymous

Guest
You folks better start realizing- this will all happen... Democrats are going to control both houses of Congress with a much heavier margin than now -- and both candidates for President are fundamentally Liberals- the only difference being Obama wants to put the money and emphasis on rebuilding the US and benefiting American industry and people-- and McSame wants to continue the nationbuilding, signing away of sovereignty thru trade agreements, and Corporate Fascism colonization/expansionialism of King George....
 

Larrry

Well-known member
King George

Okay OT so you want to keep repeating this silly phrase of yours. Fine with me that is your right.


Given that I would have the right and much more evidence in my claim if I call your socilist buddy BHO (Muslim Barry)

So tell us all what MUSLIM BARRY is going to do for you and your grandchildren.
 

Sandhusker

Well-known member
TSR said:
RobertMac said:
OT said:
And the Cheney/Big Oil negotiated backroom secret energy policy of the past 7 years of the Bush/Cheney reign has been such a great stunning success
You keep posting like that and the black helicopters are going to come pick you up...or would that be the guys in the white coats with the sleeveless jacket?!?!?! :roll: :???: :roll: :shock: :lol: :lol:

Energy policy for the last thirty years has been Sierra Club Democrat policy...blocking development of USA resources has led to our dependence on OPEC oil. These high energy prices are exactly what the Dems want and are spinning this to blame the oil companies...and a lot of fools are buying into it!!!!!!!!!!!!!! :shock: :roll: :shock: :roll:
Make no mistake about it...the Democrat party wants to destroy the oil industry!

But, TSR, where is the government going to replace the BILLIONS OF DOLLARS OF TAXES THEY PAY???????????????????? :shock: :???:

The government will find some way to replace those taxes or else do without them by, as you and others have suggested cutting spending. That's what they are doing now aren't they? And I am not referring to the cutting spending part. I mean the big oil companies are getting tax breaks already, compliments of our government, while other countries are charging them a lot more tax than what our country does. Boy I love helping those giant corporations by giving them those tax breaks so they can move those jobs overseas or use those tax breaks to help fund those higher taxes levied by foreign countries. Whatever we do, lets don't rescind those breaks and give them to smaller companies that don't relocate overseas (and which btw also pay taxes, many, many, small might equal 1 giant) and keep everything right here in America. No lets leave everything the way it is. America isn't a lucrative market for any corporation anyway is it. :? :? :???:

They would do more business here (pay more taxes, pay more lease money, pay more royalties, employ more Americans, etc....) if the Democrats would let them extract US oil. This whole thing has an easy soltion if you think about it for 15 seconds.
 

Cal

Well-known member
mrj said:
TSR, do you really fail to understand that those increased taxes will be passed along to US, the customers who NEED that fuel????

Or, that oil is the fuel of private enterprise and democratic nations???

Or, that SUPPLY AND DEMAND are driving the price of oil higher because more third world nations are growing their economies and demanding (buying) more oil? Especially diesel fuel. And THAT is what's keeping fuel prices high!

But the real reason for the USA having such a shortage of our own fuel is the abject failure of Congress to stand up to enviro-extremists, in fact catering to them by blocking production of more oil and refining adequate amounts of fuels right here at home.


mrj
....or the amount of capital needed for research and development, or the fact that throught the years the oil business is not always profitable, or that most common folks retirement funds are invested in oil. The rate of return on investment that "big oil"
recovers is usually far less than what those make that are doing all of the bellyaching. The collective taxes on fuel at the pump far exceed any profit realization by those that created the product.
 

TSR

Well-known member
mrj said:
TSR, do you really fail to understand that those increased taxes will be passed along to US, the customers who NEED that fuel????

Or, that oil is the fuel of private enterprise and democratic nations???

Or, that SUPPLY AND DEMAND are driving the price of oil higher because more third world nations are growing their economies and demanding (buying) more oil? Especially diesel fuel. And THAT is what's keeping fuel prices high!

But the real reason for the USA having such a shortage of our own fuel is the abject failure of Congress to stand up to enviro-extremists, in fact catering to them by blocking production of more oil and refining adequate amounts of fuels right here at home.

I say they are being passed on to us right now anyway along with the shift of jobs to overseas. Do you understand that if that extra money was here we could be building up our country internally via small business and infrastructure. Or do we just keep on the same o, same o, way of giving giant conglomerates making more money than any time in the history of the world tax breaks tht could be put to better use here. The same breaks tht help fund their tax load abroad. Higher taxes that they evidently pay without a lot of thought. Why? because it is profitable for them to operate abroad even with those taxes. They know this lucrative US market (at least for now) will help them out that and our gov't.

Oil is the fuel of democratic nations???? China comes to mind, Mrj
You sound just like the Republican Senators on C-span Mrj. Supply and Demand is not the ONLY thing affecting prices.


mrj
 

Cal

Well-known member
It really seems like all of the Dems feetdragging on domestic exploration and wanting to stick it to "big oil" is mostly of benefit to the dictators like Chavez and Middle Eastern nations that have this history of promoting activities that are certainly not in our best interest, and are a definite burden to the people and businesses of the US. Oh well.....birds of a feather.....
 
A

Anonymous

Guest
You know I'm to the point that I don't care if it took taxpayer money-and had to be done as a government project-- but I think someone should develop alternative sources- coal plants- coal gasification plants- wind tubines and transmission lines - strains of hybrid vehicles (electric, gas, multi fuels)- even if some of it sat unused when oil/gas prices were extremely low--just so the next time some Oil Execs, Speculators, or Ali Baba the camel rider cartels want to hold us hostage to their prices we can give them the proverbial finger and fire up all our own sources..

Much rather see our Billions and Trillions of $ doing that then going oversees to build the GW Bush TransIraqi desert highway...
 

Mike

Well-known member
You know I'm to the point that I don't care if it took taxpayer money-and had to be done as a government project-- but I think someone should develop alternative sources- coal plants- coal gasification plants- wind tubines and transmission lines - strains of hybrid vehicles (electric, gas, multi fuels)- even if some of it sat unused when oil/gas prices were extremely low

The Bush/Cheney 2005 Energy bill did those things.

And just to prove it..........Barack Obama voted for it, saying that it "DOUBLED" the incentives for alternative energy production. :lol: :lol: :lol: :lol: :lol: :lol:
 

TSR

Well-known member
Sandhusker said:
TSR said:
RobertMac said:
You keep posting like that and the black helicopters are going to come pick you up...or would that be the guys in the white coats with the sleeveless jacket?!?!?! :roll: :???: :roll: :shock: :lol: :lol:

Energy policy for the last thirty years has been Sierra Club Democrat policy...blocking development of USA resources has led to our dependence on OPEC oil. These high energy prices are exactly what the Dems want and are spinning this to blame the oil companies...and a lot of fools are buying into it!!!!!!!!!!!!!! :shock: :roll: :shock: :roll:
Make no mistake about it...the Democrat party wants to destroy the oil industry!

But, TSR, where is the government going to replace the BILLIONS OF DOLLARS OF TAXES THEY PAY???????????????????? :shock: :???:

The government will find some way to replace those taxes or else do without them by, as you and others have suggested cutting spending. That's what they are doing now aren't they? And I am not referring to the cutting spending part. I mean the big oil companies are getting tax breaks already, compliments of our government, while other countries are charging them a lot more tax than what our country does. Boy I love helping those giant corporations by giving them those tax breaks so they can move those jobs overseas or use those tax breaks to help fund those higher taxes levied by foreign countries. Whatever we do, lets don't rescind those breaks and give them to smaller companies that don't relocate overseas (and which btw also pay taxes, many, many, small might equal 1 giant) and keep everything right here in America. No lets leave everything the way it is. America isn't a lucrative market for any corporation anyway is it. :? :? :???:

They would do more business here (pay more taxes, pay more lease money, pay more royalties, employ more Americans, etc....) if the Democrats would let them extract US oil. This whole thing has an easy soltion if you think about it for 15 seconds.

And who knows, if the Republicans hadn't blocked speculation reform, we might be debating drilling here in the US. And I can't help but think BOTH parties knew how it was going to end, this debate on speculation and drilling, before it ever started. I will give the Dem's credit for one thing, they weren't afraid to mention drilling here in the US, saying that the oil companies already had leases to millions of acres yet untapped. But the Republicans were afraid of the word "speculation", I think I heard one Rep. mention it during the C-Span debates. As I said earlier, I wish the whole country could have seen those debates in the Senate. They certainly were thought provoking.
 
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