The numbers don’t add up. President-Elect Obama’s new tax plan calls for a tax rebate of $500 per adult, or $1,000 per working family. That money would come from the “wind fall profits” taxes on oil companies.
If I estimate 50 million working American families for the 300 million Americans, that’s $1,000 times 50 million. That’s $50 billion dollars.
Exxon netted $37.4 billion in nine months. Chevron earned $18.7 billion for 2007 (operating cost were $214.1 billion). Shell earned $131,567 million in their third quarter ’08. If we add these up, we can estimate almost $70 billion dollars for the year.
Put the Obama rebate and the oil company profits together, you quickly realize that $20 billion is leftover, assuming these are the only companies, oil hadn’t dropped in price, and that a president would be crazy enough to do this.
So what happens when the wind fall profits dry up and the oil giants are stuck with the taxes that supply the rebates? Or when stockholders lose astronomically because of the taxes on their money?
If you read between the lines of a Reuters article, Obama gave credit to Exxon for helping to pay the national debt and that they already pay a $1.2 billion in taxes annually.
So let’s tax them more and send them into bankruptcy to stave off the national debt? We raise taxes on already heavy-taxed oil companies, redistribute that money in the form of tax rebates to Americans making less than a certain amount, and call it job creation? Isn’t that the C-word? Where’s the incentive to invest? To make profit?
Wouldn’t this just destroy oil companies?
The last time I checked, the goal of a business of any kind, is to make money above all else. You can donate to charity, have a masseuse in your break room and offer one month vacation time, but first you have to make money. That’s the point. Nothing happens until profit happens. It’s a cold hard reality.
Exxon’s $14 billion-plus profits in the 3rd quarter were unpopular. We hated $4 a gallon gas, so we drove less. Gas is now below $2 a gallon as a barrel of oil is at $53. That’s quaint compared to those 3rd quarter prices when a barrel of oil hit more than $140. All futures markets arguments aside, I don’t want to be around when those 4th quarter losses are released.
If President Obama succeeds, buy a great pair of walking shoes, because you won’t be driving anywhere.
You’ll be walking everywhere.