29 percent of voters — including 37 percent of Democrats and 16 percent of Republicans — favor nationalizing the oil industry.

“For starters, your example is not compelling. Your little EHS business was not earning billions.”

I fail to see how that matters.  Profit is not measured by the gross (total) amount of revenue generated.  “Profit” is the NET amount remaining from revenue after all expenses are paid.

“I guess it relates to your question: “So how much profit is “excess”?”

The answer is huge profits. No matter if the industry is only making .08 on the dollar.”

Wrong again.  “Profit” is not the “huge” amount of money “coming in.” You’re conflating gross revenue with “profit.”

If it costs a company $4 billion to generate $4.5 billion in revenue, they do not have $4.5 billion in profit.  They would not be taxed on that $4.5 billion, under either the income tax or under a “windfall profits” tax - they would be taxed only on the net profit.

Your overly simplistic suggestion could put a company with a very slim profit margin but huge gross revenues out of business.

“The total profit coming in is huge by any estimate ever known to mankind and any business that ever existed on the face of the earth.”

How is that relevant?  Because they’re generating record revenue, that means we need to tax them? 

By the way, why not attack Microsoft for “huge” profits?  Its profit margin actually is much larger than the “big oil” companies, and it makes billions of dollars in revenue every year.

So by your reckoning, a corporation with a profit margin of 0.1% on $20 billion in revenue is a valid target for a “windfall profits” tax, while a corporation with $5 million in revenue, but a profit margin of 25% is not?

“You can’t tax a windfall if there is none.”

Truer words never were spoken.  You still have not defined when profits would meet the definition of “windfall”. 

“None of it has anything to do with making money itself as evil, or with small business, or overly complicated legalistic concepts of how to fairly tax profit vs earned income.”

Yet you continually argue in favor of taxing people or businesses when they make a lot of money, with “a lot” being some undefined amount, other than “huge” or “massive,” and your only justification for doing so is that it’s “more than they can spend.”

For starters, your example is not compelling. Your little EHS business was not earning billions. Impractical for any small business, no matter how successful or how undeserved to ever come under the umbrella of windfall profit.

So why even go down that route ?

I guess it relates to your question: “So how much profit is “excess”?”

The answer is huge profits. No matter if the industry is only making .08 on the dollar, as some slyly suggested. The total profit coming in is huge by any estimate ever known to mankind and any business that ever existed on the face of the earth. 

How to tax it is not as complicated as you suggest either. Obama just wants to tax a barrel of oil over $80.

It’s just a tax. 

Jimmy Carter has been demonized by the right so much and so well few know his windfall profits tax was not the abject failure the cons make it out to be.

It brought in $80 billion. Not a big success. Not a tremendous failure either.

There were two nails in the coffin that later finished it off. The first was the simple fact that gas prices stabilized, making a windfall tax unnecessary. You can’t tax a windfall if there is none. The second was that Carter was followed by Reagan, who did not like the tax.

Aside from that the tax itself worked.

In fact, Jimmy’s luxury car tax also worked. It was unpopular with Detroit because in those days Detroit still had a lockgrip on the luxury car segment. Cadillac meant something in those days.

Now, would mostly tax foreign cars, but it would be wildly unpopular with them too.  In other words, as a tax, it worked. As a means to discourage inefficient and environmentally objectionable and wasteful vehicles, it worked. Politically, wildly unpopular.

How would you react if Washington targeted your business with a special tax specifically ? You would feel like you have a bullseye painted on your forehead. You would go berserk, rightly or wrongly, does not matter.

Big Oil is not evil for making money. That is a logical mischaracterization you see on lowbrow places like the internet. Some do think making money is evil, but serious arguments don’t go down that path.

Well then, are they evil or not ?

Lieing or dissembling about how bad they have it, not doing everything in their power to improve the situation, actively opposing alternative energy and global warming fears even when proven to exist, accepting “royalty relief” when in fact it no longer makes sense, not proactively cleaning up spills like Exxon-Valdez, paying their executives grossly disproportionate salaries while letting soccer moms pay extra, profiting from human misery like Katrina and lack of refinery capacity - well -

none of these things, absolutely none, are positively beyond doubt evil in any way, but all, every one, are on a slippery moral slope which some could easily construe as evil.

Rightly perhaps. Wrongly ? Who knows ?

None of it has anything to do with making money itself as evil, or with small business, or overly complicated legalistic concepts of how to fairly tax profit vs earned income. Keep in mind this is something simple. Big Oil is a natural target for a new tax at a time when we need one and a time when we would dearly like for Big Oil to share in the pain at the pump, not profit from it.

That simple.

Nope.  I’m not “attacking any attempt to try to justify taxation.” Taxes are necessary to keep the roads in working order (just look around), police, fire, schools, etc.

As far as taxing those with money rather than those trying to put a banana on the table, yup - such has ever been the case, at least with income taxes and certain other taxes.  I don’t see anyone, including me, proposing to enact some new tax on the poor. 

But now you’re saying that, because the businesses in question “did nothing” to “earn” their current profits, that means the government is justified and empowered to take some measure of those profits away and give them to, uh, let’s see - other people who “did nothing to earn” them. 

So how much profit is “excess”?  How much of the profit did the business “earn,” versus how much is a “windfall”?  I mean, at some point, just for the mechanics of the tax to function, we’ve got to be specific in measuring the tax base.  The government gets to decide how much profit is “reasonable”?  And how much you actualy “earned” or didn’t earn?

So if market conditions become “abnormal” or “unique,” it provides government authority to take away some degree of profits that the government determines to be “unearned” and therefore “excess”?  No, no, and no.  Such happenings are indeed EXACTLY the payoff for taking the business risks you mentioned. 

Quick case-in-point.  Years ago I worked for a company that provided training courses covering certain US EPA and DOT regulations regarding management, transportation and disposal of hazardous waste.  In 1984, Congress enacted new legislation giving EPA broad new authority and imposing several resctrictions on where and how hazardous wastes could be disposed.  In 1990, EPA published a massive regulation implementing the first wave of those restrictions, and then during the 1990’s issued a series of rulemakings to implement all of the requirements.  Our business went through the roof.  Attendance at our classes went way up.  The cost of paper and shipping did, too, so we increased our prices, yet our numbers kept climing.  The company made more money during that time period than it ever had before.  Windfall profit that needs to be taxed?  Or good fortune of having been in the right business at the right time?  We had made the investment of being in that business and had weathered some bad times (early in Reagan’s first administration - remember, he said he was going to get rid of the EPA?  All of sudden people stopped coming to our classes, thinking they wouldn’t have to do that stuff anymore).

It’s called supply and demand.

Yes, taxation AS A GENERAL CONCEPT, is necessary.  This particular tax - the so-called, bogus-named “windfall profits” tax, is indeed a scheme by the Dems.  I have not yet seen how it is “necessary,” other than to make the poor fossil-fuel-fired car drivers to feel better that Congress is out there, smacking down them big, bad ol’ mean, nasty “Big Oil” corporations for making all that dirty money.

Bill,

You argue that taxation is a necessary evil but then you attack any attempt to try to justify taxation. Talk about having your cake and eating it too. Dang.

Since taxation is necessary it would seem logical to some that the most ideal candidate for taxation would be someone who has so much money they don’t know what to do with it rather than tax someone struggling to put a banana or an orange on the table for the vitamin C.

The idea that a business is “too successful” is a bit of a stretch. I know that argument in general resonates with businessmen who go into business and assume all the risks for the possibility to get rich rather than only make a modest living.  However, in this case, the business in question, did nothing to earn this so-called “success”. It was dictated by abnormal market conditions, not the excellence of the businessmen in question or the success of the business model.

I’m just quibbling with extending the reasonable concept that business has risks and so must allow for big profits to include a highly abnormal and fairly unique situation like this. Splitting hairs.

I also quibble with the characterization of windfall profits tax as a “scheme” by the Democrats.  Once again, go back to what you said, that taxation is necessary. Necessary, not a scheme, not a gimmick.

Why discuss it ? It won’t solve all problems but obviously having more revenue flowing in will contribute to having money for incentives to drill, for instance, or for roads, or for alternative energy.

If Big Oil is unable to profit from commodity restrictions it will provide some possible incentive to Big Oil to maximize production, not turn the taps down to a trickle, not that Big Oil is not already doing its utmost to maximize production because we know these guys are honorable and decent men.

(am I getting paid me to say that?)

“This isn’t about completely alleviating suffering, getting us off of foreign oil, or anything else you mentioned. It is just a tax, a way to move money from one place to the next.”

Hey at least you’re being honest here and admitting that the stupid “windfall profits” tax has nothing to do with actually addressing any energy problems.  It’s nothing more than bald-faced wealth redistribution.  Nothing like punishing a business for being “too” successful.  Gotta take some of that to give it to others, because, after all, “you’re pulling in more money than you can ever spend.” I.e., once again - your mantra - soak the “rich” because they’re making too much money and it’s Just Not Fair!!

Show me where in the U.S Constitution is says anything about the government having the power to determine how much money anyone is allowed to make and to regulate that amount. 

“If you don’t believe in the validity of taxes you won’t like the idea of a windfall profit tax.”

Never have I said I don’t believe in the validity of taxes.  O.W. Holmes infamously stated “taxes are the price we pay to live in a civilized society.” Does the government have the power to tax?  Yes.  Should the government have the power to tax?  Yes - of course; it’s a necessary evil to have a reasonably strong, organized government.  Now that we’re past that threshold question, we’re debating the details of any particular taxing regime. 

“It’s a tax, not a comprehensive solution to the energy crisis.”

Then why is it even being discussed?  Particularly in the context of the price and availability of gasoline?  It is simply yet another scheme by the Dems to redistribute wealth.  Here again we have self-appointed arbiters determining how much profit is “too much.”

“I’ll SWAG and say it would take 20 years to get a refinery built and operating today.”

Most SWAG estimates say the time required to get an oil platform up and running is considerable too, but that does not keep folks from complaining that lack of drilling is directly responsible for the plight we are in now.

There does not seem to be an easy way to get politics out of the drilling vs. no-drilling discussion.

So, back to windfall profits, an easier topic.

To make your wheat field example a decent analogy to a windfall situation:

You are now pulling in more money from the bakery than you can ever spend and yet you did absolutely nothing to cause this additional profit. You aren’t making scones any different than you did at the beginning.  Your customers are suffering because scones are now extraordinarily expensive. They are starving (let them eat cake?) because they can’t afford scones.

That makes for an absurd analogy but a better fit to an oil windfall. 

This isn’t about completely alleviating suffering, getting us off of foreign oil, or anything else you mentioned. It is just a tax, a way to move money from one place to the next.

If you don’t believe in the validity of taxes you won’t like the idea of a windfall profit tax. It’s a tax, not a comprehensive solution to the energy crisis.

Drilling is not a solution either. At least, not anytime soon.

From Harry Reid’s Senate website:

“Just 21 Percent of Outer Continental Shelf Leases Are in Production. There are 7,740 active leases in the outer continental shelf and only 1,655 are in production. [Department of Interior]

Just 19 Percent of Outer Continental Shelf Acres Under Lease Are Producing. There are over 41,000,000 acres in the outer continental shelf have been leased for oil drilling, yet only 8,123,000 acres are in production.

33 Million Outer Continental Shelf Acres Under Lease Are NOT Being Drilled. There are 33 million acres of the federal OCS lands that are under lease but are not producing. [Department of Interior]
Of 45.5 Million Acres of Federal Lands Leased to Oil and Gas Companies, 31 Million Acres Are Not Producing.  There are 45.5 million acres of federal onshore lands currently leased by the oil and gas industry—but there are over 31 million acres not producing. [Department of Interior]

MOST RECOVERABLE OFFSHORE OIL AND GAS IS OPEN TO DRILLING

79 Percent of Recoverable Offshore Oil Is Open to Drilling. Currently 79 percent of America’s technically recoverable offshore oil reserves are open for leasing, while just 21 percent are closed to drilling. [Minerals Management Service, 2006]

82 Percent of Recoverable Offshore Natural Gas Is Open to Drilling. Currently 82 percent of America’s technically recoverable offshore natural gas reserves are open for leasing, while just 18 percent are closed to drilling. [Minerals Management Service, 2006]”

His point is that recoverable oil does exist, and that leases have actually increased lately, but that Big Oil is not drilling. Not cooperating.

I see no problem in quoting Harry Reid but I would imagine it would irritate you, (sorry) just as noting that Sen. McCain has flip-flopped over the issue of drilling offshore.

Flip-flopping is no big sin to me, no stain on McCain’s record, but to you conservatives, probably a badge of dishonor. “Oh my Gawd, the mawn flip-flop-ped. Oh dear me...a flip-flop-per...”.

You can just see the shock waves ricocheting through Windsor Farms. McCain the flip-flopper.
Someone call Homeland Security. Time for an orange alert. We have a conservative flip-flopper. What happened ?

“There is no evidence of price fixing by oil companies but there is ample evidence of windfall profits.”

Can you define what a “windfall profit” is? 

Let’s say you decide to open up a bakery.  You draft a business plan, seek investors, scrape up your life savings, take a out a second mortgage, create a corporation, scope out a location, purchase or lease space, come up with a name and logo, create marketing and advertising pieces, invest in tens of thousands of dollars of equipment, inventory and store fixtures, and finally have your opening day. 

Business putters along nicely.  After a few years, suddenly the cost of flour starts climbing rapidly.  But people still absolutlely love your scones.  They line up every morning to buy a bag of fresh-made scones.  You have to keep upping your price to cover your flour costs, but it doesn’t matter; your scones are selling like, uh, hotcakes.  Your business booms like mad because you’re charging more than you’ve ever charged before, yet people still keep buying more and more of your product. 

Do you have a windfall profit?  What if you owned your own wheat fields, and many other wheat fields were stricken with a blight, but yours wasn’t, so you manage to maintain your own supply of flour despite the general flour shortage?  But people still want them scones, so you’re cranking them out as fast as you can.  Should the government have the authority to come in and tell you how much you’re allowed to sell your scones for? 

The notion of “windfall profits” in the current context is bunk.  And a federal windfall profits tax will do nothing - nada, zilch, zip - about actually lowering the cost of a gallon of gas at the pump, developing alternative sources of energy, or getting us off of foreign oil.

“The oil companies are making the profits but they aren’t investing in drilling (existing and already approved offshore where the leases have already been purchased) or refineries.”

That’s because nobody will let them drill anywhere.  Sure they have existing leases - but are there recoverable quantities of oil there?  What if they’ve got leases on X hundred thousand acres, and 200 of those acres might have some oil down there under 14 miles of solid rock?  Again, should the government force them to drill where there are no proven reserves?  Rather than saying “they haven’t drilled on land they already have the right to drill on,” let’s find out why that is the case.  Mayhap because there ain’t no oil there, or what oil there is is not (at current prices) worth going after, when there are other, more economically viable sources.  How about if instead, we drill where we know the oil is? 

As far as new refineries, where are you going to build one these days that a few hundred people won’t line up and lie down in front of the bulldozers to prevent it?  And have you any idea of the pre-approvals, permits, etc., that you would have to go through to even get permission to begin thinkig about where to put one?  I’ll SWAG and say it would take 20 years to get a refinery built and operating today.

There is no evidence of price fixing by oil companies but there is ample evidence of windfall profits.

The oil companies are making the profits but they aren’t investing in drilling (existing and already approved offshore where the leases have already been purchased) or refineries.

In fact, I read a little article on MSN.com that says Exxon-Mobil may be going away. Their oil wells are drying up so the company is literally evaporating. I found that hard to believe (a company that size in no danger of disappearing) but it was at least mildly interesting.

Governments do collect more in taxes than the oil companies. If you take at face value that oil companies are raking in billions (as you should) then governments should be awash in cash too. Maybe so, but interestingly, that does not seem to prevent both the federal and state gov. from running huge red ink deficits and whining about being at the brink of bankruptcy.

Why ? Well for one thing, if gas profits go up, up, up as the price at the pump goes up, the tax on a gallon of gas remains static.  The same amount of money per gallon as collected ten years ago assuming that tax rates were constant. They are not constant but they are generally not proportional. Fixed.

It gets worse. If people do cut back on driving, and conserve, fewer gallons of gas will be purchased, resulting in less tax revenue.

This will hurt worse in Europe where gas taxes are used to pay a variety of bills. Over here, to keep the roads in repair. Not that it works that way. There is no lockbox on gas taxes. The money gets frittered away while the roads continue to crumble and the bridges continue to fall apart.

If you listen to the posters here, you would think the oil companies themselves are in imminent danger of financial collapse. Wrong. You own wallet does not lie.

Look at the date of the article. May, 2001. Bush proposed new drilling, more nuclear and 10 billion in breaks to promote conservation and alternative fuel research.

And look who threw a panty drippin hissy fit when he did.

Remeber that the next time you fill up. If you can afford to.

Gray Davis said what?

“We are literally in a war with energy companies who are price-gouging us. Many of those companies are in Texas.”

We LITERALLY are in a “war” with energy companies??  Funny, I must have missed that. 

And they are “price-gouging” us?  Last I heard, a major contributor to the increasing price of gasoline is speculators on the futures market. 

Seems to me the only people “price gouging” us is the U.S. Congress, as the federal government apparently gets more money per gallon of gas than the oil companies do - and what are we getting for our money?  Nancy Pelosi and Harry Reid.

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