or- DON QUIXOTE OBAMA - TILTING AT WINDFALLS
Windfall Profits Tax 101: How to Make the Producers Pay and Damn the Consequences.
1. April 1980: Windfall Profits Tax - JIMMY CARTER - SOCIALISM FOR THE UNITED STATES IN THE OLD CENTURY
In the United States, President Jimmy Carter signed the Crude Oil Windfall Profits Tax Act into law in April 1980.
The windfall profits tax was forecasted to raise more than $320 billion between 1980 and 1989. However, the government collected only $80 billion in gross tax revenue and, to the extent that the tax was deductible against corporate income, the actual net realized was closer to $40 billion.
According to the Congressional Research Service, the 1980 windfall profits tax depressed the domestic production and extraction industry and furthered our dependence on foreign sources of oil.
2. April 2008: Windfall Profits Tax - HUGO CHAVEZ - SOCIALISM FOR VENEZUELA IN THE NEW CENTURY
Venezuela starts collecting new windfall profits tax on oil companies, as part of President Hugo Chavez' plan to gain a larger share of oil company profits.
President Chavez, a Socialist, has said the tax is necessary to fund key social programs as part of his effort to implement an economic and social system he calls "21st-century socialism."
Critics say the tax will slow investment and development in the oil sector, and also discourage other foreign direct investment in Venezuela.
3. April 2008: Windfall Profits Tax - BARACK OBAMA - SOCIALISM FOR THE UNITED STATES IN THE NEW CENTURY
“Obama wants windfall profits tax on oil companies” (The Guardian April 25, 2008). “Democratic presidential hopeful Barack Obama today called for a windfall profits tax on oil companies, which he said would be used to ease the burden of rising energy costs on poor and middle-class Americans.”
Campaigning in Indiana, Obama selected a gas station as the forum in which to announce his attack on “…the energy lobby, (who) have blocked ‘meaningful relief’ to consumers hard hit by high gasoline prices.” He went on to say that, "It isn't right that oil companies are making record profits at a time when ordinary Americans are going into debt trying to pay rising energy costs. That's why we'll put a windfall profits tax on oil companies and use it to help Indiana families pay their heating and cooling bills and reduce energy costs".
Obama's campaign did not indicate how much money a windfall profits tax would raise.
I shouldn’t be surprised at Mr.Obama’s evocation of the present policy of Hugo Chavez or the past policy of Jimmy Carter. I was surprised, however, that he decided to make his policy announcement at that gas station. He very well could have caused a crowd to gather, evoking images of the lines of those waiting for gas in Jimmy Carter’s time.
Oh well. Just another example of Mr. Obama’s commitment to change.
Now, we know that the Socialists, Liberals and Progressives all love the idea of taxing, their DNA demands it. Most especially, they insist on taxing the producers for, as Willie Sutton explained that he robbed banks ‘cause that’s where the money is’, Liberals tax where they can find the most capital. The possibility that such capital might better be utilized by the producers to expand exploration and production has no appeal.
And specifically, we should ask why the whole question of windfall profit taxation exerts such a strong attraction for the Democrats. Why is it their philosopher’s stone? Is it because there is such an imbalance between the ‘obscene’ profits of the oil companies and the taxes they pay in the normal course of events? Is it because of the extremely beneficial impact that these windfall profit taxes will have on the underlying problem of energy use and availability? Well, at the risk of being accused of using facts rather than emotion, let’s see what history shows us.
It may be an oversimplification, but the truth of the matter is that the price paid by the consumer for oil products is only partially dependent on the price of crude and the costs of transporting and refining it. Historically, "..taxes of various kinds add substantially to the price of the finished product, and greatly exceed the cost of the original petroleum."
(THE AGE OF OIL - Leonardo Maugeri, 2006)
As to the comparison between oil profits made and taxes paid, in the final quarter of the last Century the oil companies paid about 2 trillion in taxes to the federal and state governments – about triple what their profits were for the same period. So, it seems that the real recipients of windfall profits were the governmental taxing agencies who made three times what the rapacious oil companies made. Do you suppose it might be possible for these agencies to impose windfall profit taxes on themselves?
As to the beneficial impact of such Liberal policies on the underlying problems of energy availability and cost, do you remember asking yourself about that as you waited in Jimmy Carter’s gas station lines then - or do you ponder over all the promises made by Nancy Pelosi and company a year and a half ago and the complete lack of accomplishment since then?
The Democrats are trying to characterize John McCain’s campaign as an attempt to establish the 3rd term of the George Bush presidency. Would that they were right. I would much prefer that to what Obama is promising, the 2nd term of Jimmy Carter.