It’s difficult seeing your wallet drained by high gas prices, which everyone said was due to natural disasters constricting supply, and then hearing that oil companies had record profits last quarter. That just feels like somebody is profiting from disaster or using it as an excuse to raise prices. (Never mind that prices at the pump are lower now than they were before Katrina.)
Still the big profits (around $9-10 billion for several of the big companies) has led even Republican politicians to call for “windfall profit taxes.” It sounds good at first blush, but is really a bad idea.
How much profit is too much?
For one thing, who decides how much profit is enough? Do you want government bureaucrats and politicians (or more likely, their lobbyist friends) to begin deciding what constitutes “sufficient income”? Because if they can do it to one group, none of us are safe.
Seconding Dom’s post, the productive thing to do is not to tax a company that is succesful. It is much more productive to invest in such a company, or start one of your own.
JBP
To be fair, we still pay a lot less than in Europe where they routinely pay $5-7/gallon. We don’t think twice about paying $2 for a Starbucks 16oz coffee a day (or more) which equals $16 a gallon for coffee! But we’re the first to complain that $2.75 for gas is outrageous.
In response to higher gasoline prices, our congressman (East Bay of Northern California) was quoted in the local paper as wanting to add a $5/gallon tax.
Not sure if I understand how boosting the tax by so much is an appropriate response to higher prices at the pump, but at least he let his constituents know his true feelings about taxing us.
Taxing the wealthy whether it’s via a “windfall tax” or the grossly flawed income tax is merely a redistribution of wealth at the point of a gun under the guise of generosity and charity aka Socialism condemned by Pius XI in Rerum Novarum.
If it can be proved that through fraud or collusion these oil companies amassed these large profits then they should be punished in court. Once we start punishing companies for what someone perceives as excessive profit what is to stop the government from taxing those wage earners who make excessive amounts of money? Oh, wait a minute; they already do that via the Federal Income tax.
If the gov’t takes their profits this year, then it owes them money in the years when they lose money. This is the mechanism that leads to socialism.
Exxon better pay that money out in dividends to stock holders!
I’m glad Exxon is making a ton of dough, they need to be able to ward off Chinese investers who are already eye balling them.
That being said the gov’t has a duty to ensure that there is some sort of competition going on/no collusion.