Republicans Block Democrat Bill to Tax Oil Profits

[lawrocket 3]

http://news.yahoo.com/s/ap/20080610/ap_on_go_co/congress_oil_profits

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The Democratic energy package would have imposed a tax on any "unreasonable" profits of the five largest U.S. oil companies

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"Americans are furious about what's going on," declared Sen. Byron Dorgan, D-N.D., and want Congress to do something about oil company profits and "an orgy of speculation" on oil markets.

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The windfall profits bill would have imposed a 25 percent tax on profits over what would be determined "reasonable" when compared to profits several years ago. The oil companies could have avoided the tax if they invested the money in alternative energy projects or refinery expansion. It also would have rescinded oil company tax breaks — worth $17 billion over the next 10 years — with the revenue to be used for tax incentives to producers of wind, solar and other alternative energy sources as well as for energy conservation.

This goes back to Mike's thread about punitive taxes. Any profits that are deemed "unreasonable" would be taxed at 25%. Gee. What makes "unreasonable?" Whatever the government says, right?

The oil companies should take that money and invest in oil refineries or alternative energy projects. Gee. That's a good idea. Why don't we tell these companies that seem to do a good job of running themselves that they are not allowed to return these profits to stockholders, like retirement funds and the like. Wow. That's how to make a stock market pick up.

Invest in alternative energies? Tht's nice of the government. Put that investment in and let the oil companies RAISE PRICES!

Or, have them build more refineries, when the refineries can't do much about not getting more oil in to refine. (Either invest in alternative technologies or build more polluting refineries. Politics to a tee!)


This is an example of PURE politicking. The plan will do absolutely ZERO to bring relief to people buying fuel. In fact, it'll likely increase the price as the companies pass on the costs to the consumers.

Then again, the government will get in on the action, bringing in large sums for money for itself.

Reagan said of the way the government works, "If it's moving, tax it. If it's still moving, regulate it. If it stops moving, subsidize it."

p.s. - how much of the world'd oil do the big American companies control? 10% tops?

When the price of a barrel of oil more than doubles, one would expect that the price of gasoline would follow suit. But let's blame the oil companies.

My wife is hotter than your wife.

[mnealtx 0]

Is Waters still trying to get support for nationalizing the oil companies?

If you think gas is expensive NOW, wait until the gov't controls it.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[billvon 3,133]

Windfall profits tax - bad idea.
Ending special tax breaks for oil companies - good idea.

It's unfortunate they were lumped together.

[StreetScooby 5]

Thank goodness we have some sane Republicans that blocked this. The fact that Democrats would actually try and do this, again, completely boggles my mind.

We are all engines of karma

[kelpdiver 2]

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That goodness we have some sane Republicans that blocked this. The fact that Democrats would actually try and do this, again, completely boggles my mind.

Indeed - nothing will get us off the status quo of energy dependence like continuing to throw benefits at oil companies.

[chinagirl 0]

Is it really that hard to conclude that the oil company would pass on the tax burden to the consumer? Isn't that what most corporations do when modeling their pricing structure? How taxing the oil company will result in lower gas price is beyond my comprehension. But that might be just me....

~Built for Abuse
www.skydivethefarm.com

[StreetScooby 5]

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How taxing the oil company will result in lower gas price is beyond my comprehension. But that might be just me....

No, it's the Democrats that don't have a clue about economics. They haven't demonstrated any comprehension of things like "nonlinear" or "inverse response".

We are all engines of karma

[mnealtx 0]

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Is it really that hard to conclude that the oil company would pass on the tax burden to the consumer? Isn't that what most corporations do when modeling their pricing structure? How taxing the oil company will result in lower gas price is beyond my comprehension. But that might be just me....

Anyone with half a brain knows that companies 'pass it down'. The Dems know this as well.

However, if they show that they have "helped the little man" and punished that evil company, then they've got a double win - and more money to buy 'bread and circuses' with. Triple win if they can blame the Republicans for blocking it.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[kelpdiver 2]

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Anyone with half a brain knows that companies 'pass it down'. The Dems know this as well.

They pass it down when they can. Oil is pretty inelastic, so most to all would be passed. However, as seen in 2006, the threat of such a tax can depress prices in the short term.

But other taxes cannot be passed down, the supply-demand curve operates independently of taxes. An example would be mandating living wages or health insurance for service industry employees. McDonald's can only sell a big mac for so high a price before people make other buying choices. Smaller restaurants with a smaller economy of scale are esp at risk here. They may have to live on a lower profit margin instead.

[billvon 3,133]

>How taxing the oil company will result in lower gas price is beyond my comprehension.

The only mechanism whereby this happens is that:

1) Cil company execs perceive the threat of new taxes as a threat to their profitability.

2) They make a minor cut in price to 'split the difference' between the loss they will see as a result of the new tax, and the previous profit they were making.

3) Lawmakers/the public sees this as "capitulation" and no longer demands the tax.

4) Oil company execs justify their actions to shareholders by pointing out that they are making more profit than they would have under the new tax - even though their profits are down.

So it certainly _can_ work. I disagree with the use of taxation for those purposes though.

[lawrocket 3]

It's politicking!

Think about it - the American people blame the oil companies for this issue. They are struggling at the pump to pay, and the oil companies are pulling in a profit of 10%.

So Congress can set out to make the enemy pay! It won't do the consumer any good at all, but it punishes the "bad guy."

Think of it like socialized medicine - the aim is for equal misery for all.

My wife is hotter than your wife.

[airdvr 210]

This was nothing more than a Democrat dog & pony show in an election year. They knew it wouldn't pass, but now Barack can say the Republicans aren't trying to do anything.

Congress in general has lost the ability to "do the right thing". This partisan crap has got to stop.

Please don't dent the planet.

Destinations by Roxanne

[kelpdiver 2]

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Congress in general has lost the ability to "do the right thing". This partisan crap has got to stop.

When was it last otherwise?

[mnealtx 0]

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Congress in general has lost the ability to "do the right thing". This partisan crap has got to stop.

When was it last otherwise?

Beat me to it... I was going to ask "Since when is THIS new?"

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[airdvr 210]

I'm not saying it's new...I'm saying I'm sick of it. It takes a Pearl Harbor or 911 to get all these assholes looking in the same direction.

Please don't dent the planet.

Destinations by Roxanne

[mnealtx 0]

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I'm not saying it's new...I'm saying I'm sick of it. It takes a Pearl Harbor or 911 to get all these assholes looking in the same direction.

Even then they don't....

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[chinagirl 0]

Let me ask you guys something...just out of curiosity, who do you think is enjoying the profit oil companies are generating. The executives or the shareholders? I'm trying to gain a little more understanding about the antagonistic view against the oil companies.

~Built for Abuse
www.skydivethefarm.com

[mnealtx 0]

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Let me ask you guys something...just out of curiosity, who do you think is enjoying the profit oil companies are generating. The executives or the shareholders? I'm trying to gain a little more understanding about the antagonistic view against the oil companies.

They both are - it's the *perceived* unfairness to Joe Sixpack.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[rushmc 23]

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Windfall profits tax - bad idea.
Ending special tax breaks for oil companies - good idea.

It's unfortunate they were lumped together.

I have heard over and over agian about the "tax breaks" big oil gets. I have yet to find something specific about what those tax breaks are. Do you have a link or source I can look at what they really are?

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[chinagirl 0]

Two more question, is it really fair to say that oil companies are like any other business corporation considering that fuel is a commodity that our entire economic system "sort of" revolves around? Would you consider it a monopoly?

~Built for Abuse
www.skydivethefarm.com

[rushmc 23]

Quote

>How taxing the oil company will result in lower gas price is beyond my comprehension.

The only mechanism whereby this happens is that:

1) Cil company execs perceive the threat of new taxes as a threat to their profitability.

2) They make a minor cut in price to 'split the difference' between the loss they will see as a result of the new tax, and the previous profit they were making.

3) Lawmakers/the public sees this as "capitulation" and no longer demands the tax.

4) Oil company execs justify their actions to shareholders by pointing out that they are making more profit than they would have under the new tax - even though their profits are down.

So it certainly _can_ work. I disagree with the use of taxation for those purposes though.

Per thier reports, they make 8% return on investment. How is this bad?

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[rushmc 23]

Quote

It's politicking!

Think about it - the American people blame the oil companies for this issue. They are struggling at the pump to pay, and the oil companies are pulling in a profit of 10%.

So Congress can set out to make the enemy pay! It won't do the consumer any good at all, but it punishes the "bad guy."

Think of it like socialized medicine - the aim is for equal misery for all.

Disagree. Thier aim (the Dems) is control

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[rushmc 23]

Quote

Let me ask you guys something...just out of curiosity, who do you think is enjoying the profit oil companies are generating. The executives or the shareholders? I'm trying to gain a little more understanding about the antagonistic view against the oil companies.

One of the largest investors in "big oil" is union retirement funds.

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[chinagirl 0]

I don't know for sure if what I read is accurate but the shareholders are investors like us, thru mutual funds, pensions, IRA, and retirement plans. Is it a bad thing to make an investment and expect a profit?

I don't like the rise in gas price at all but I have yet to hear of a viable solution that seems fair to both the oil company and the consumer. If that is at all possible...??

~Built for Abuse
www.skydivethefarm.com

[kelpdiver 2]

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Let me ask you guys something...just out of curiosity, who do you think is enjoying the profit oil companies are generating. The executives or the shareholders?

The executives by a long shot - as a shareholder I've been unimpressed - doing no better (and worse I believe) than the S&P500 over the past 8 years.