Democrats vs. Freedom – the Windfall Profits Tax
Posted by Enrique on 06.10.2008
Democrats pander by demonizing oil companies
Oil companies can't force us to buy their product – if the price of gas is too high, we can simply choose not to buy it. Government, on the other hand, can force people and businesses to do what they want. The latest example of government using force to accomplish a "noble" goal is the windfall profits tax for oil companies being debated in Congress this week:
Senators were to vote Tuesday on whether to consider a windfall profits tax against the five largest U.S. oil companies and rescind $17 billion in tax breaks the companies expect to enjoy over the next decade.
"The oil companies need to know that there is a limit on how much profit they can take in this economy," said Sen. Richard Durbin of Illinois, the Senate's No. 2 Democrat, warning that if energy prices are not reined in "we're going to find ourselves in a deep recession."
Thank God for wise men like Dick Durbin, who know exactly what the correct limit on profits should be. Silly me, I thought in a free market people and businesses were entitled to earn as much as possible. Of course, we don't have a free market in America, as demonstrated by government meddling like this proposed windfall profits tax.
Certainly reasonable people can debate the wisdom of rescinding tax breaks for oil companies – I'm not a fan of corporate welfare myself. But taxing "excess" profits smacks of totalitarianism. Although we've heard a lot from the MSM about how oil companies are making "record" profits, they only refer to the dollar amount – they almost never talk about the profit margin, which is a much better indicator of a company's finances.
For example – $10 billion dollars in profit may sound like a lot, but if company revenues are $100 billion, the margin is only 10%. Current oil company "record" profit margins are in the range of 10%-15%, which put them in line with many other businesses across all sectors. In other words, oil companies aren't making more profit than other companies – it's just politically expedient to pander to American's economic ignorance by demonizing Big Oil.
What does Durbin expect the effect of a windfall profits tax to be? In the business world, if your company is suddenly faced with increased expenses without increased revenue, you have to cut expenses, lower the quality of your product or service…or you pass your additional costs on to the consumer. And I thought Democrats were trying to lower gas prices.
Simply put, Oil is too important of a commodity to be left to the whims of the free market, and especially in the hands of some fat cats with big lobbyist $$$.
I suppose we should just let them run rampantly unfettered, eh? You know, I'd rather have the government--who is elected by me--be in control of something rather than an oil company who, last I checked, I didn't get to vote for.
Republicans keep beating the Big Business drum but it's the wrong tune, daddio...considering such an attitude for the past eight years have left a lot of folks pretty screwed over. CEO bonuses are doing fine, however.
I can't wait for this election. I almost wish we could make a giant gold statue of George "W." Bush and push it over come election day, to fit right in with the false spoon-fed imagery we got from Iraq.
What was I saying? Oh yeah...to summarize this article, "Oil companies can ream you up the ass, and no one should do anything about it."
Wake up, genius...oil as it stands now is not a luxury. It's a necessity. Oil could reach $10 and I'd have to pay it just to get to work. So yeah...that seems fair, I guess.
Posted By: Ken B. (Guest) on June 10, 2008 at 12:57 PM
This is another example of politicians telling people what they want to hear rather than reality. The effect of a windfall tax would be to reduce the supply of oil provided by the companies. This would cause the price to rise while reducing oil company profits. So the question is do we hate the oil companies enough that we'll pay more for gas in order to reduce their profits?
Posted By: Caleb (Guest) on June 10, 2008 at 01:09 PM
Wasn't it the Republicans who claimed "during tough times and crisis, extra measures have to be taken to protect Americans"? It all sounds great when it threatens our privacy but when it comes to protecting record level corporate profits, the tune changes does it?
"Oil companies can't force us to buy their product – if the price of gas is too high, we can simply choose not to buy it." Exactly what the hell is wrong with you? A CHOICE?
Listen, the far right avoided alternatives to oil for years. Now when the bubble is about to burst on your watch, you blab about free markets and totalitarianism.
Your "article" spits in the face of every hard working family who is struggling because of the outrageous prices.
This bill also included tax breaks for alternative, renewable energy you idiot. "Moving forward" my ass.
I will NEVER vote Republican again!
Posted By: askquestionslater (Guest) on June 10, 2008 at 01:31 PM
Hell yeah.
Posted By: Jamal (Guest) on June 10, 2008 at 02:03 PM
"Enrique" is an unusual Amish name. Usually it's "Isaiah Yoder" or "David Hoffman" or something like that. But, being Amish, it's easy for him to say, "Oil companies can't force us to buy their product – if the price of gas is too high, we can simply choose not to buy it." The rest of us don't have that luxury, although, if things keep going they way they're going, I may be interested if Enrique has an extra horse-and-buggy he wishes to sell.
Posted By: RGR (Guest) on June 10, 2008 at 02:16 PM
Thanks for shedding light on the truth.
Posted By: Just me (Guest) on June 10, 2008 at 02:42 PM
I am for punishing oil companies and oil speculators who price collude or break the law in some fashion. However, this is, obviously, not the intent of this tax.
The tax appears to be intended as punishment for the oil companies' for DARING to make profits or to pacify a concerned citizenry. As such, the tax idea is ill conceived, so the GOP's filibuster makes sense to me.
After we tax the profits, how do we PREVENT the gas companies from raising prices to recoup their tax losses.
Listen folks: You need to quit looking for scape goats.
The way out of this gas mess is to CONSERVE and seek ALTERNATIVES to crude oil.
Hello? (Knock, knock).
Is ANYONE in there?!
Posted By: KYJurisDoctor (Guest) on June 10, 2008 at 03:07 PM
Enrique, you speak of ignorance as if its something that doesn't include you. "if the price of gas is too high, we can simply choose not to buy it" that is about as ignorant as you get.
That statement holds true for lots of merchandise, clothing brands, car brands, foods, toys ect. but it does not hold true for gas. The average American does not work in walking/biking distance from their home. What is their alternative? What happens if they 'choose' not to buy the gasoline they need for their cars? They can't go to work and can't make money to provide for their families. Oil companies don't have to force us to buy their product, life forces us too.
Now i agree with you in that its not fair for the government to just step in whenever they like and put restrictions or impose regulations on private businesses. However right now the problem we as a nation are facing is greater than that. We are on the verge of another depression (some would say we're already there). People are losing their jobs because they can't keep their cars on the road due mainly to incredible gas prices.
You may not care about anyone but yourself but thankfully not everyone thinks that way. Thankfully there are other people who reconize that in order to save this country steps that may not be popular to all need to be taken. Something needs to be done to reel in gas prices and the oil companies sure as hell aren't going to do it themselves. Now i'm not saying that this bill is the best option and if you have any ideas for how to lower gas prices I'd honestly love to hear them (apart from killing the planet by drilling wherever we please).
I also semi agree with your final point, that the tax will cause the oil companies to take steps that will actually cause the price to go higher, but i disagree with your reasoning. You say its because of the 'business world' and thats only half true. Its because of the greed that governs the business world. Oil companies could take steps and slash their prices. Yes they would lose money, lots of it. But they would provide relief for millions of americans. is this bad busines? by american standards yes, but there comes a time where the needs of the nation trump the needs of a few corporations, because if this trend continues soon there won't be anyone who can afford the gas and that is NOT in the oil companies best interest.
Posted By: stronelis (Guest) on June 10, 2008 at 03:15 PM
A windfall profits tax wouldn't work, and might even make prices higher. Let's say the lefties enact this tax, and they decide that $30 billion is the limit for oil profits before their penalty kicks in. You can be darn sure if I'm a CEO, our profits come in at about $1 short of that $30 billion figure. And that will only cause supplies to tighten, which ultimately drives up prices. I have no problem with them getting rid of the tax breaks, but enacting a new windfall penalty is silly beyond words.
Posted By: Eric (Guest) on June 10, 2008 at 03:51 PM
It is not just about buying gas, oil affects the price of all of the items that we use, since few of of live near farming communities anymore (or for that matter grow our own food) we all pay the cost for increased transportation cost. We do not have a choice in this, it is either eat or die!!! I don't know if I am in agreement with a so-called "windfall tax" since it could mean an increase in price to replace that lost income, but we should rid ourselves of big business corporate welfare...The so-called free market is not actually that when you give big business tax incentive(welfare) ...
Posted By: I (Guest) on June 10, 2008 at 04:02 PM
And I also have the freedom to vote the bastards out of office too.
Posted By: Guest (Guest) on June 10, 2008 at 05:12 PM
The pure ignorance of some of these replies is laughable. Any 9th grade economics education would tell you that a tax would not cause prices to fall, nor would price fixing, nor would subsidation all would result ultimately in higher prices or product scarcity. The idea of nationalizing is even sillier. You're basically saying that you want the gasoline supply to be run at the same level of quality that we've come to expect at the DMV & the public schools?!?!?
Also this idea of no choice to buy gas not being true is also silly. Yes, I'm sure there is no way that you can get 100% out of buying gasoline but come say you're broke when you're car pooling with 3 other people / traded in your car for a Vespa scooter / and stopped going to the mall three times a week. Don't act like you don't have at least some level of control over your consumption. You're like a fat person whining that they can't help but eat.
We are in this crisis because of government intervention, further bureaucratic nonsense isn't going to get us out!!
Posted By: ChErikS (Guest) on June 10, 2008 at 06:04 PM
what kind of a lazy republican response is that? Youre basically telling everyone who cannot walk or ride their bike to work to suck it up and deal with it. We're still spoiled somehow. Yes, make asinine assumptions about people you don't know, but come november, those people who are truly hurting will take your republicans out of office, then the "wait and see" economic policy of every republican will finally be gone. It really helped us in the years after Clinton.
Bush: Oh no, we're in a recession, what should we do?....lets just wait it out until the next president and claim the economy is cyclical. Oh, and lets also fight a war we spent billions of dollars on with no outcome for over 5 years and lets stay there for another 95 years!
This country is suffering, we are in a recession, its only going to get worse before it gets better, and the republican stance of "lets not do anything in regards to economy" is not the way people are thinking now.
Posted By: mike (Guest) on June 10, 2008 at 06:58 PM
Preach on, brother mike.
Oh, this fall, there will be SUCH a culling that will probably be felt for the next 12 years or more. G'bye, lil Repubs~!
Posted By: Ken B. (Guest) on June 10, 2008 at 07:09 PM
Just to remind everyone that there was a windfall profits tax on oil until 1988 so it must have been a tax Reagan liked and I don't remember prices being high during Reagan.
Posted By: Joe Rivett (Registered) on June 10, 2008 at 10:29 PM
Hey Joe Rivett, that windfall tax was put into law by Jimmy Carter. Over the next 8 years, the tax was projected to bring in over 225 billion dollars. What was the final amount? It was about 79 billion in revenue; however the tax lowered the oil companies tax burden so effectively the tax only brought in around 40 billion. Yeah that tax sure did work out like Carter planned.
Posted By: MrMe11 (Guest) on June 10, 2008 at 11:18 PM
There seems to be some confusion about whether or not people have a choice about buying gas. A lot of folks seem to be under the misapprehension that they have no choice.
We always have a choice about what we purchase from private businesses. A person who can't afford gas can ride a bike, ride public transportation, or car pool.
Sure, that's not convenient. But convenience isn't a right.
Thanks for all your comments!
Posted By: Enrique (Registered) on June 11, 2008 at 09:55 AM
"We always have a choice about what we purchase from private
businesses. A person who can't afford gas can ride a bike, ride
public transportation, or car pool.
Sure, that's not convenient. But convenience isn't a right."
And if your work is thirty miles away and not on a mass transit route, you never had a right to a job in the first place. And when you lose your house and medical insurance, those weren't a right either. And when your kid needs chemo, well, kids weren't really a right either.
Posted By: Pat Shepard (Guest) on June 11, 2008 at 06:35 PM
The point of a windfall profits tax is not to raise money. It's a wake-up call. And it worked perfectly when Carter & the Dem Congress imposed it in 1980. Within two years the price of oil at the well and gas at the pump plummeted, which is the real goal. It sounds counterintuitive but signals oil companies and speculators that the party's over. If that doesn't work, you go to plan B, which is to take steps toward nationalization. Then, the "windfall profits" tax will be 100%, all going to help us pay for basic services and the like. Nations with national oil companies are rolling in the dough, piling foreign currency reserves to the ceiling: Russia, Venezuala, Iran, the Saudis, the Norwegians. It's not the American way, yet, but if the oil companies push their luck, and the pain gets intense enough, the public may decide to turn this curse into a blessing.
And that bogus argument about poor service in public-controlled entities is baloney. Where they underperform, it's usually because Right-Wingers like Enrique cut their funding. So quit dumping on public servants who do twice the work for half the money as people in the private sector.
Posted By: RGR (Guest) on June 12, 2008 at 02:18 AM
STAY CURRENT