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A Profit Tax
Posted by: Jon Henke on Sunday, May 07, 2006

Arlen Specter (R-Pander) wants a tax on excessive profits...
A Republican senator says the government should consider a tax on oil companies if they make excessive profits amid rising gasoline prices.
Tax those "extreme, obscene profits" echoes Senator Carl Levin (D-Greedy).

Therefore, since asking $3/gallon and making profits of 10%+/year is just unconscionable, I expect prompt Congressional action to remove taxpayer subsidies and impose windfall profits taxes on Kraft Foods.

With milk going for $3.19/gal — even more than gasoline! — and the dairy products in which Kraft Foods traffics generally going for even more, Kraft Foods is making a profit margin of 12.38%. That, by the way, is almost 2 percentage points higher than Exxon-Mobil's "extreme, obscene profits" profit margin.
 
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Previous Comments to this Post 

Comments
Let’s not forget the existing 35% tax.

I’m to lazy to dig out my annul report, how much of the profit is being kept offshore to avoid any taxes?
 
Written By: Ryan
URL: http://
Since Windfall profits taxes are so good, I have a modest proposal. We push for a windfall profits tax on left wing actors and filmakers, and a big one on class action trial Lawyers.
 
Written By: kyle N
URL: http://impudent.blognation.us/blog
Best way to collect tax would be to add 5% tax on each gallon of gas.
 
Written By: Unaha-closp
URL: http://
When the midterms roll around, is there an option for electing nobody and just keeping those slots empty?

What party line does "empty seat to gather dust" run on, it would win in a landslide

 
Written By: shark
URL: http://
Best way to collect tax would be to add 5% tax on each gallon of gas
I dunno, maybe we should tax excessive Congressional pay and benefits packages...
 
Written By: shark
URL: http://
Jeez man, how much milk do you drink?

My household goes through perhaps as much as 30 gallons of gasoline a week. And drinks 1-2 gallons of 1% milk.
 
Written By: Ozymandias
URL: http://
Obscene profit tax? Can we get one of those for the govt too?
 
Written By: Chris
URL: http://
Jeez man, how much milk do you drink?
What part of a tax on excessive profits do you not understand?

When allowing those who actually pay income taxes to keep more of their hard earned wages is framed as unfair, and unchallanged amongst our 4th estate, it should not surprise me that someone cant recognize the difference between a 10% profit margin ala ExxonMobile, a 13% profit margin ala Kraft, or a 46% profit margin ala Google.

 
Written By: bains
URL: http://
Jon

Why stop here? Why not get rid of the anti-trust laws? The Sherman Act? What an anachroism. The minimum wage should also be done away with, along with any laws giving rights to collectively bargain.

The overtime laws suck too. So does the FMLA. Get rid of them.

Your problem, Jon, is that your argument proves too much. But that is the problem with libertarianism generally, of course.

 
Written By: mkultra
URL: http://
First they came for the oilman’s obscene profits, and I did not complain because I was not an oilman.

Next they came for the snack company’s obscene profits, and I did not complain because I was not a snack vendor....
 
Written By: Harun
URL: http://
Your problem, Jon, is that your argument proves too much. But that is the problem with libertarianism generally, of course.


Only a problem if you view the individual as too stupid to act in their own best interests, which MK, is the gist of much of your arguments. But maybe your right... maybe it would be in my best interest to increase what I pay the government so that they could tell me whether or not I would rather work twenty 42 hours a week for the 40 hours at time and a half or whether I’d rather work five 48 hour weeks and get an additional paid week off.
 
Written By: bains
URL: http://
Woah: there be some fuzzy math comparing the profits between Kraft and Exxon/Mobil.

something more accurate in terms of profit is what percentage of profit is $1 billion annually over ’break even’ between the two companies? That is a more accurate comparison, given the beef in question.

Kraft is owned by Altrea Group, by the way. They, besides being the largest food manufacturer in North America, are a mere subsidy. The entire group had Sales of 76.8 Billion with income of 11.3 Billion.


Exxon Mobil
had Sales 334.6 Billion with Income of 36.7 Billion.

Oops...all that from oil that really at some point belongs to someone else. All E/M does is tap it, refine it and deliver it. The ultimate middle man. Wow, kind of like Enron.

So I cry foul on comparing apples to oranges using a non sequitir statistic (profit margin).

Just how many billions a year in profit is too much? For some corporate apologists on this list, the answer is one past infinity.
 
Written By: Rick D.
URL: http://
When Bill O’Reilly was ranting about obscene profits for oil companies, and how it costs so little for them collect the oil, vs how much they were selling it for, I wrote him an e-mail.

I noted that it costs him almost nothing for each word he harvested from his brain, but he was charging his consumers thousands of dollars for each one — so I asked him if he should be hit with a "windbag profit tax".

He never responded.

Microsoft’s profit margin was much higher than Exxon-Mobil’s. The funny thing is, if we broke Exxon-Mobil into 10 companies, none of them would make "obscene profits", but they would probably charge more for oil because of loss of economies of scale.

And to show that it’s all just politics, the democrats are all praising Citgo, and Venezuelan leader Chavez, for their "generosity" in selling discount oil to a couple hundred thousand of the 280 MILLION people in our country.

Meanwhile, Citgo stations are just about the same price as every other station, and Citgo has the same profit margins. But since Citgo is owned by a country, not shareholders, Chavez actually has the legal right to sell his oil more cheaply — and yet he continues to charge the going rate. And democrats, instead of attacking Citgo (the only company that actually can legally undercut the going prices) they praise them.

If Exxon/Mobile tried to sell their oil for below the market rate, the stockholders would win a lawsuit for mismanagement.

Anybody who wants to get back the money they spent on gas that went to the oil company’s "windfall profits" can buy oil company stock, and get their profits back in the form of dividends.

 
Written By: charles
URL: http://twoconservatives.blogspot.com
"Windbag Profit Tax" is very good, Charles. May I steal it?

It would be easy (and in too many cases sadly accurate) to assume the politicians who are ranting over profit spikes in the oil business really don’t have a clue. Worse, though, many do understand how markets work but also realize that the average voter clearly doesn’t. Politicans are, by their nature, weasels, self-evident proof of public choice theory and ever capable of pandering to the electorate regardless of how demeaning or intellectually absurd such pandering may be. Likening them to whores is an insult to prostitutes everywhere, though it did cross my mind that their opinion of us is reflected in the amount of that check we were supposed to get. Now what else can a member of congress buy for roughly $100 these days?
 
Written By: D.A. Ridgely
URL: http://
Oops...all that from oil that really at some point belongs to someone else. All E/M does is tap it, refine it and deliver it. The ultimate middle man. Wow, kind of like Enron.

So I cry foul on comparing apples to oranges using a non sequitir statistic (profit margin).

Just how many billions a year in profit is too much? For some corporate apologists on this list, the answer is one past infinity.


The whole point Rick D. is that it is not the governments job to determine ’how much profit’ is OK. The market will do it.

Also, Exxon makes 10% for ’tapping, refining and delivering’. You make it sound like that is the easiest thing in the world to do. Are you insane? It is nothing less than an engineering and logistical MIRACLE that gas costs as little as it does. You think big bad EM making 10% is a bad thing, but Kraft makes 14% margin and that’s all fine and dandy for you. How?
 
Written By: meagain
URL: http://
Why stop here? Why not get rid of the anti-trust laws? The Sherman Act? What an anachroism. The minimum wage should also be done away with, along with any laws giving rights to collectively bargain.
The overtime laws suck too. So does the FMLA. Get rid of them.



I agree. MK, I love it when you get it right on an issue.
 
Written By: Wulf
URL: http://www.atlasblogged.com
I agree. MK, I love it when you get it right on an issue.
Heh ... Interesting on how MK is usually only right on something when he’s being sarcastic, isn’t it?
 
Written By: McQ
URL: http://www.qando.net/blog
all that from oil that really at some point belongs to someone else. All E/M does is tap it, refine it and deliver it. The ultimate middle man
Tell you what, next time you want to gas up your car, skip the middleman and dump a bucket of crude into your tank...or better yet, go to the source, skip all the middlemen and tap your own oil, refine it, and you’re good to go!

When you eat a lobster dinner you don’t complain about the price, but it’s the same thing- you’re paying for the middlemen, the chain of men and machines that gets that lobster from the boat to your plate.

Maybe we should go after the excessive, obscene profits of the seafood companies

 
Written By: shark
URL: http://
By the way, labor law doesn’t give workers "rights to collectively bargain," it denies employers the right not to bargain with the collective (i.e., union).
 
Written By: D.A. Ridgely
URL: http://
A tax on excessive profit (whatever the hell that means....) is not going to result in any tax break and is not going to equal dollars back in your pocket, or my pocket. Again...Congress Hood robs the rich and keeps it for himself and his band of merry spenders.

It will keep money out of the pocket of EM investors though.... I guess that’s supposed to be a wonderful thing and I’m supposed to rejoice that my government is taking care of me, yet again.
 
Written By: looker
URL: http://
...Congress Hood robs the rich and keeps it for himself and his band of merry spenders.
Ah, you see, but there’s the trick. They do it for the ’common good’ and thus can point to it as redistribution of income and they’re just the agents.

For important projects such as spending $700 million to relocate a railroad bed in Mississippi after they’d spent $250 million to rebuild it in Katrina’s wake.

Can’t allow companies who might actually do something useful with the profits (you know like expanding refining capacity and doing more exploration, or even, horror of horrors, paying their shareholders) when we can do wonderful things like the Mississippi project.
 
Written By: McQ
URL: http://www.qando.net/blog
I postmarked this page the other day and am still going over it. This is interesting though. Click on the "most profitable" in the Fortune 500 box. It will take you to this page where if you select each company you will get their percentage of profit from revenues. Exxon 10.6%. Citigroup 18.8%. Bank of America 19.6% General Electric 10.4%, etc.
The Tax Foundation has this information>
Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.
Let me re-emphasize that: gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period. And governments don’t have R&D or exploration costs. No production or labor costs. No worldwide tax liability. They just sit on their asses, collect the money and then misuse it.
 
Written By: tom scott
URL: http://
I demand hearings relating to the windfall profits that big government is making on the backs of the oil industry! I want a rebate check! I want a WPT! Arghhh!
 
Written By: flask
URL: http://
You know what I want? I want for the media to give us the whole story. They sensationalize the profits made by oil companies, but fail to mention the 10% profit margin mentioned earlier. They also fail to mention that Microsoft’s is 31%. Can you imagine what gas would cost if the oil companies had a profit margin as large as Microsoft’s?
 
Written By: sugarsnap
URL: http://
The only reason our government is going after our domestic oil companies is because it is an election year. They know gasoline is a hot topic among American’s and they will do anything to make them popular among the voters. Like some of you have said there are hundreds of comapnies making much larger profits. If we go after one we have to go after all of them and that would be absurd.
 
Written By: Gabbie
URL: http://
The populism on display in Washington is scary. All these politicians calling for windfall taxes and caps on executive pay, etc., is getting closer to socialism all the time.

And all this talk is diverting us from the real answers we need. We need more energy (oil, nuclear, other alternatives) to keep up with our growing demand (hi-tech gadgets, China and India booming, etc.) and that isn’t going to change any time soom. Maybe ever.

The more you tax something the less you get of that thing. So a windfall tax on oil means oil, as it did in the ’80s when last tried, and that’s *exactly* what we *don’t* want!
 
Written By: tokyorose
URL: http://

 
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