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Andre
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http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/3551022/Barack-Obama-breaks-first-campaign-promise-by-dropping-oil-tax.html
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During the campaign, Mr Obama repeatedly promised to submit oil and gas companies to a profits windfall tax, citing the disparity between their huge profits and the struggles of ordinary Americans.
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But the proposal has been quietly dropped from his agenda listed on transition team website's www.change.gov[/URL], setting off a storm of protest among liberal bloggers and small business groups.[/quote]
Wondering what the relation is with the economic crisis.
TheStatutoryApe said:I actually remembered how much crude had dropped when I left work and they were talking about it on the radio. Apparently they speculate that if economic difficulties hit china as well it may drop to about $25 a barrel.
tchitt said:Why would anyone want to stop the oil companies from making money?
It's not as if they're all ripping us off.
Congress points the finger at "corporate fat cats" (free market industrialists making the capitalist system work for everybody) so that the wrath of the people isn't turned upon them.
They've got a cushy, high paying, do nothing job and they want to hold on to them.
What people need to understand is that these companies may be pulling record profits... but their costs also go up with the crude that they need to buy so it can be refined.
Their profit margins remain the same, the only difference is the final dollar amount which is inflated due to supply and demand issues.
Because then you have a huge amount of money in the hands of a few people. Sure these people do things with the money, like invest it, but they also just store a lot of that money. At the same time there are people that are starving.
Someone is getting more money than they deserve. There was no oil shortage or bigger difficulty in getting it here when the prices spiked as far as I know. That means someone got something for nothing. Is it their right to try and do that? Maybe (cheating people out of their money is illegal as far as I know). But the consumer didn't get a say in it at all, since this was all across the board. There was no other competition to go to that had lower prices.
Oh I love this point, especially since I just tore down your free market fetish. Why should the wrath of the people be turned on Congress? What did Congress do? Spent the money unwisely? Maybe. But people are clearly clamoring for more of what Congress did, not less. So maybe the people don't want a free market?
The CEO's of oil companies? Because right now Congress people make about $170k/year. That's not what I would consider "high paying", although I agree that they should do more. Hell, maybe if they got paid more they'd care more? Isn't that how the free market works? You'd get more qualified people in because they'd be attracted to the money?
Like I said before, someone made a lot of money on this because there was no real reason for the prices of gas surging like that.
Exactly. That makes a whole lot of difference. Would you rather have 5% of your salary of $500/week taken away or 5% of your $5000/week salary taken away? It's still the same percentage, but $25 for the $500 salary is the difference between having a meal and not having it one day, whereas $250 for the $5000/week guy is chump change because everything still costs the same amount. That's why a flat tax is a ridiculous idea. And likewise here, they made a lot more money while prices for everything else basically stayed the same.
tchitt said:WarPhalange: That's exactly what they would do. All corporate taxes are imbedded in the prices of the products you pay for when you buy them. There's no such thing... and this is one of the biggest flaws in liberal economics.
OmCheeto said:What would the tax be called if we taxed gasoline, every time it drops by 10 cents a gallon, we tax it by 5 cents more per gallon? I got very used to the price being $4/gallon. I almost feel I have to apologize to the station attendant now that it is only $1.80/gal.
tchitt said:Proton Soup: Taxing corporations causes them to turn around and incorporate the tax right into the price tag of whatever it is they're selling. So I don't see how you agree with my point when I was saying taxing corporations only makes prices go up... pushing the tax burden back onto the people. Therefore it would be beneficial for all of us if the United States didn't have the highest corporate tax rate in the world.
Any money we can save businesses (large and small) is money invested in the economy. Why do we think the answer to our financial problems is relieving prospective employers of money they would use to pay employees and upgrade their facilities? The left wants to suck the life out of our livelihood... our jobs.
tchitt said:Ah. I misunderstood you. I interpreted your post as though you didn't really read anything I typed and just interjected something to the effect of "Yeah, the corporations should just have to pay for everything." Actually I'm a supporter of a movement involving a complete overhaul of our current tax system that you've perhaps heard of. It would be a totally indirect tax in the form of a national sales tax. Sort of radical but it does have widespread support and adheres more closely to what I see as American principles. It would also reduce the tax code from thousands of pages to tens, and abolish the IRS (No more April 15th anxiety)... significantly streamlined. www.fairtax.org
I know we're getting pretty off topic here, but I think there's still some relevance to all this seeing as how the topic relates to taxation, corporate or otherwise.
Proton Soup said:try and be consistent now. if the consumer ultimately pays all the taxes as you propose, then it makes no sense to tax everyone when you can just tax a smaller number of businesses. the people pay all the tax, just indirectly. yet now, the tax system is significantly streamlined.
you can't have it both ways, that would be hypocrisy. if on the other hand, you wish to shift the tax burden from the corporations down to the consumers, then the consumer has less money left over to buy goods and it has the same sort of stagnation on the economy you wish to claim taxing from the top does.
TheStatutoryApe said:There needs to be a happy medium. Of course no one is ever really happy about the middle ground though.
If you tax businesses too much then they will not want to operate here. They will leave and people will be less inclined to start and/or maintain their businesses because it will require more capital.
http://www.msnbc.msn.com/id/11098458/DALLAS - Exxon Mobil Corp. posted record profits for any U.S. company on Monday — $10.71 billion for the fourth quarter and $36.13 billion for the year — as the world’s biggest publicly traded oil company benefited from high oil and natural-gas prices and solid demand for refined products.
Unless of course they are investing the extra $ in alternative energies.Ivan Seeking said:http://www.msnbc.msn.com/id/11098458/
Profits: That means salaries are paid and material costs of production are already satisfied. Taxing profits is not the same thing as taxing the gross income. There is no cost shifting to the public or tax burden shifting from employees. A windfall profits tax would bite into the money used presumably for exploration.
I would certainly prefer that money be used to end the addiction to oil, but this is hardly in the interest of the oil companies.
Katsman, as managing director of an investment firm, agrees with Simon, stating that;"I would rather get my dividend", rather than see Exxon Mobil invest 10% of it's profits in alternative energy.http://www.bloggingstocks.com/2008/04/01/alternative-energy-makes-little-impact/"
Posted Apr 1st 2008 5:57PM by Aaron Katsman
"Why is Exxon Mobil resisting the renewable revolution," asked http://markey.house.gov/" .
Simon said his company, which earned $40 billion last year, had provided $100 million on research into climate change at Stanford University, but that current alternative energy technologies "just do not have an appreciable impact" in addressing "the challenge we're trying to meet."
Thieves!Shell said:In the future, http://www.shell.com/home/content/innovation/alternative_energy/biofuels/biofuels.html" may also provide a sustainable source of vegetable oil for the production of biofuel for diesel engines. In 2007, Shell announced plans to build a pilot facility in Hawaii with partner HP Biopetroleum to investigate the potential. It is early days but algae holds promise because they grow rapidly, and can be cultivated in ponds of seawater, minimising the use of fertile land and fresh water.
About the size of two city blocks.The joint venture, with Hawaii-based HR Biopetroleum, will initially build a small research plant covering 2.5 hectares...
The two companies did not reveal the size of the investment but Shell will have a majority stake in the company, called Cellana.
In any event, the billions and billion and billions have already been pocketed and the price of oil is down, so the point is rendered academic until the price of oil goes back up.
Maybe we should ask the oil companies to bailout the auto companies.
During the campaign, Mr Obama repeatedly promised to submit oil and gas companies to a profits windfall tax, citing the disparity between their huge profits and the struggles of ordinary Americans.
...
But the proposal has been quietly dropped from his agenda
What's preventing it? Let's say ExxonMobil sets their profit margin at 4%. You tack on a profit tax of, say, 50%. What's preventing ExxonMobil from raising their profit margin to 8% to compensate?Ivan Seeking said:Profits: That means salaries are paid and material costs of production are already satisfied. Taxing profits is not the same thing as taxing the gross income. There is no cost shifting to the public or tax burden shifting from employees.
russ_watters said:What's preventing it? Let's say ExxonMobil sets their profit margin at 4%. You tack on a profit tax of, say, 50%. What's preventing ExxonMobil from raising their profit margin to 8% to compensate?
Ivan Seeking said:Set their margin? Are you suggesting that the profits last year were based on some predetermined margin?
Supply and demand. Or are you suggesting that the oil companies will conspire to maximize profits?
Ivan Seeking said:Supply and demand affects the price of everything in a free market.
What is your point?
Yes! You didn't know that? Why do you think the profits are higher when the price is higher? The margin is the same.Ivan Seeking said:Set their margin? Are you suggesting that the profits last year were based on some predetermined margin?
[edit] I said margin, but I really meant markup. Markup is the multiplier for the commodity price. Margin is after all overhead is subtracted out, what is left. Similar, but not exactly the same. But of course that means that the margin actually grows when the price increases and the markup stays fixed... [/edit] Supply and demand determines the commodity price, but the markup is essentially fixed: Competition determines the markup, but unless something radical changes, the market stabilizes and the markups become essentially fixed. Every business works that way. How can you not know this? Haven't you ever noticed that certain gas station types are always a few cents cheaper than others in an area, yet the price varies from one area to another. Here, the cheapest is almost always Wawa (but you've probably never heard of them_. Supply and demand determines where the price can be at a certain location and the home office decides how far above or below that to set their price based on a profit margin they are willing to live with. Wawa is always cheaper because their business model includes a mini-market, which is where most of their profit comes from. Cheaper gas brings higher volumes of people into the market (where the markups are huge).Supply and demand. Or are you suggesting that the oil companies will conspire to maximize profits?
Haven't you ever asked yourself why, if that was true, did all the oil companies earn record profits last year? BP and Exxon determined through competition what markups they were willing to live with and when the price doubled, the profit doubled (actually, more than doubled since the fixed costs did not change). There is no reason for either of them to change their markup in that kind of situation. If you add a new tax, it does not affect supply and demand at all, it only effects profit. So both can simply pass the cost on to the consumer, and the competitive situation remains unchanged.Ivan Seeking said:That is still governed by supply and demand - ie. the price at the pump. Go ahead Exxon, raise the price artificially. BP will gladly take the business.
russ_watters said:Haven't you ever asked yourself why, if that was true, did all the oil companies earn record profits last year?
Ivan Seeking said:Consumers could care less about constraints. If gas station A has cheaper fuel than station B, I will likely go to station A.
We often used to see price wars between stations, and we still do at times, so there is genuine price competition. Also, if one company's price is artificially high, there is more than one company to take up the slack. Exxon doesn't want to lose 5% of their business, so they remain price competitive.