Before I get started on another tax piece, I need to make a correction from my last one. In that one, I talked about income taxes as if they were a simple percentage. They’re not — they are “marginal.” Apparently, the rate you pay goes up as your income goes up — but only on the portions above the prior levels. The highest rates are only on the portion of your income that exceeds the “floor” for that bracket. Sorry about the mixup and thanks to those who pointed it out.
Anyway, the big thing going around now is ExxonMobil and their record profits yet again. This is fueling folks’ demands that ExxonMobil (and, probably, the other oil companies) fork over extra money to the government under a “windfall profits tax.”
Last year, ExxonMobil made a cool $40 billion bucks. That’s a hefty hunk of change.
But in the process, they paid $30 billion in taxes.
Someone wiser than me ran the numbers, and ExxonMobil paid more in taxes than the bottom half of ALL Americans who filed tax returns last year. Over $2 billion more, to be precise.
That beggars my imagination, and I think I have a pretty good imagination.
Dr. Perry also calculated ExxonMobil’s tax rate, and it’s over 41%. That means that they’re already giving the government 41 cents out of every dollar they make.
So Exxon is huge. No argument there. But how efficient are they?
Well, their profit margin is around 9.8%. That means out of every dollar they spend, they make just under $1.10, as I understand it. A decent rate of return (certainly better than you can make at the bank). but it’s vastly outstripped by other businesses. Banks themselves, for example.
Or, to go after one of the Democrats’ sacred cows, lawyers.
I know this is not a very endearing position to take, but I can’t help but see this move as an attempt to punish ExxonMobil for being big and successful. Apparently a taxation level over 40% and over $30 billion dollars isn’t enough for some people. They want MORE and MORE and MORE. Hence all the talk about a “windfall profits tax” on top of everything else.
So, how well might that work out? If we look at how well it worked the last time, I’d have to say the answer would be “not very well.”
And I also find myself wondering just what sort of mechanism will be put in place to keep Big Oil from doing just what nearly every other business does when it can when its costs go up — passing them along to consumers. “The government says they’re going to take five cents from us for every gallon of gas? Fine. We’ll just jack up the price of gas five cents to cover it.”
And if the government says they can’t do that, then Big Oil can just play “find the umbrella.”
Maybe I’m a cynic, but I get suspicious — nay, downright paranoid — whenever the solution to a problem boils down to “have the government take more money from people making money.”
Especially those people who make their money by providing actual goods, goods essential to our nation’s ongoing survival.
I find I have more faith in Big Oil than I do the government. If I had a billion dollars lying around, I’d have far more faith that it would be used profitably — and give me back a decent return — and do more good — if I invested it in ExxonMobil than entrusted it to Harry Reid and Nancy Pelosi.
Hell, I already do that. I have far, far more faith in my 401K plan (managed by Vanguard) than I do in Social Security. And, I bet, so do a lot of others.
But back to my point: ExxonMobil already pays huge taxes and a very, very high tax rate. The only explanation I can see for people getting so furious at them is because they still have metric assloads of money left over after paying all that, and THAT CAN NOT BE TOLERATED.
Just like no good deed can go unpunished, neither can any success.
I guess I just lack the envy gene that so many people have. When I see others doing fabulously well, I say “good for them” rather than “how can I bring them down to my level?”
And I think I’m glad about that.