The High Cost of Windfall Profits Taxes

Jonathan Williams, an economist at the Tax Foundation in Washington, highlights some often-missed facts when politicians call for windfall profits taxes on oil industry earnings:

 

The last time this country experimented with such a tax was the Crude Oil Windfall Profit Tax Act of 1980.  According to a 1990 Congressional Research Service study, the tax depressed the domestic oil industry, increased foreign imports and raised only a tiny fraction of the revenue forecasted.  It stunted domestic production of oil by 3% to 6% and created a surge in foreign imports, from 8% to 16%. 

 

Politicians calling oil companies “greedy” is more than a little ironic.  Tax Foundation studies have shown that state and federal treasuries profit handsomely from oil industry sales.  The average American motorist pays taxes of 46 cents a gallon on gasoline, of which 18.4 cents a gallon goes to the federal government.  States and localities pocket the rest. 

 

The nation’s energy companies are already providing a “windfall” of taxes.  According to Department of Energy data, from 1977 to 2004, federal and state governments extracted $397 billion by taxing the profits of the largest oil companies and an additional $1.1 trillion in taxes at the pump.  In today’s dollars, that’s $2.2 trillion—enough to buy a Toyota Prius for every household in the nation.  In fact, oil companies have paid in taxes more than three times what they earned in profits during those 28 years. 

 

As the oil industry brings in record profits, it also pays record taxes that average 39% worldwide, even after accounting for special deductions and credits.  That compares with a 33% average tax rate for other industries.  In 2005, Chevron, ConocoPhillips and Exxon Mobil paid more than $158 billion in total worldwide taxes.  This gargantuan tax bill nearly equals the entire economic output of Iran and surpasses the total gross domestic product of 150 of the 184 countries ranked by the World Bank.

 

Source: “Crude Economics,” Los Angeles Times, April 29, 2006

Increased Demand and Decreased Supply...

The Washington Post’s Charles Krauthammer provides insight on the subject of the dramatic rise in gas prices.  His opinions are totally unoriginal and perfectly on the mark.

Underreported Progress on Earth Day...?

New York Times columnist John Tierney noted the following Sunday (April 23, 2006) in his regular weekly column:

 

“Most air pollutants have declined sharply in recent decades, and the amount of forest land hasn’t been shrinking at all — it’s been fairly stable since 1920 and has actually grown in the last decade.  But cheery facts like these don’t get much attention in environmental studies classes or Earth Day events.  Earth Day has traditionally been the occasion for apocalyptic predictions: global famines due to overpopulation, cancer epidemics from synthetic chemicals, cities destroyed by accidents at nuclear plants, species wiped out by deforestation, crippling shortages of energy... While Europeans have been reveling in their moral superiority in adopting the Kyoto Protocol, the United States has been pushing technologies that involve less pain but more gain, like new nuclear power plants and methods of sequestering carbon... These programs have gotten little attention.  (I managed to find a total of one newspaper article devoted to the methane project).  But if you add up the projected annual reductions in carbon dioxide from these efforts, the total is greater than what Europeans are planning to cut through Kyoto, according to David Victor, the director of the Program on Energy and Sustainable Development at Stanford University.”

Genetic Link Found for CFS

“Chronic fatigue syndrome appears to result from something in people's genetic makeup that reduces their ability to deal with physical and psychological stress,” the Associated Press reported Friday.

Al Gore's Scaremongering...?

In an April 20, 2006 editorial appearing in the Los Angeles Times, Jonah Goldberg sheds a little bit of light on former Vice President Al Gore's current scaremongering...

The United States Lags behind in Broadband...

According to an April 12, 2006 story in the Wall Street Journal, the United States ranks 12th among developed nations in high-speed Internet access.  "The U.S. continues to lag behind rich nations in Europe and Asia in adopting high-speed Internet connections, a critical form of technological infrastructure, according to data from the Organization for Economic Cooperation and Development.  The U.S. ranked 12th among industrialized nations... Iceland overtook longtime leader South Korea for the top spot.  Countries in Northern Europe filled seven of the top 10 spots, underscoring how the region is leading the way in taking up this pillar of modern infrastructure."

Who Pays Taxes and How Much

"Currently, the 1% of American households with the highest incomes -- those earning an average of about $1 million a year -- pay about 31% of their income in federal taxes, including payroll tax and income tax, according to the Congressional Budget Office.  The 20% of households with the lowest incomes -- those earning an average of about $15,000 a year -- pay less than 5% of their incomes in taxes."

"That tax system is modestly more progressive today than it was a quarter-century ago.  In 1980, households in the bottom 20% of the income distribution earned 5.7% of all income and paid 2% of all federal taxes; in 2003 -- the most recent data available -- they earned 4.2% of all income and paid 1% of all taxes.  Meanwhile, the highest earning 20% of households earned 45.8% of income in 1980 and paid 56.3% of all taxes.  In 2003 those high-income households earned 52.2% of income and paid 65.7% of taxes."

Source: "Taxes: Who Pays, and How Much?", Wall Street Journal, April 15, 2006

Kevin with Paul in NY

This shot with Paul Orenstein was taken just outside Gotham Bar and Grill in New York City in early January 2006. Brittany and I had just finished lunch with Paul and would be heading back to Alaska the following day.

Still More Positive Findings regarding Vitamin D Supplementation

According to the April 2006 edition of Shape magazine, “getting 1000 international units (IU) of vitamin D per day could/your risk for colon, breast and ovarian cancer in half...” (pg. 147)

Another Testament to the Sorry State of the Current US Tax Code

Chris Edwards, Director of Tax Policy Studies at the Cato Institute, noted in Sunday’s edition of the Washington Post (April 16, 2006): “After winning control of Congress in 1994, Senate Majority Leader Bob Dole (R-Kan.) and Speaker Newt Gingrich (R-Ga.) called for fundamental tax reform, saying the tax code was ‘overly complex’ and ‘indefensible.’  Virtually every GOP leader since then has echoed the call for reform, without ever coming close to delivering.  Since the mid-1990s, the number of pages of federal tax rules has soared by 64 percent, the hours Americans collectively spend complying with the tax code each year has surpassed 6 billion, and the annual cost of complying has more than doubled to $265 billion.  The only winners: tax lawyers and accountants.  H&R Block has tripled its revenue since 1995 as the share of taxpayers needing professional expertise has grown.  Middle-class households are struggling through the thicket of tax rules related to children, home ownership and retirement plans, while even low-income families need outside help to figure out all the special tax benefits that apply to them.”

Co-Founder of Greenpeace Says the Country Needs to Rely More on Nuclear Reactors for Our Energy Needs

Patrick Moore, co-founder of Greenpeace and chairman and chief scientist of Greenspirit Strategies Ltd., provides an influential argument regarding the need for increased use of nuclear reactors to meet our energy needs.  It is indeed very interesting that the former co-founder of Greenpeace would be making such an argument.

Recent Remarks on Global Warming from MIT Atmospheric Scientist

In an April 12, 2006 editorial appearing in the Wall Street Journal, Dr. Richard Lindzen, Alfred P. Sloan Professor of Atmospheric Science at MIT, makes some rather remarkable statements regarding global warming.  In particular, he notes that it should be puzzling to most citizens of industrialized nations that “Everything from the heat wave in Paris to heavy snows in Buffalo has been blamed on people burning gasoline to fuel their cars, and coal and natural gas to heat, cool and electrify their homes.  Yet how can a barely discernible, one-degree increase in the recorded global mean temperature since the late 19th century possibly gain public acceptance as the source of recent weather catastrophes?  And how can it translate into unlikely claims about future catastrophes?”

 

His answer is rather surprising coming from someone with such a scientific reputation: “The answer has much to do with misunderstanding the science of climate, plus a willingness to debase climate science into a triangle of alarmism.  Ambiguous scientific statements about climate are hyped by those with a vested interest in alarm, thus raising the political stakes for policy makers who provide funds for more science research to feed more alarm to increase the political stakes. After all, who puts money into science — whether for AIDS, or space, or climate — where there is nothing really alarming?  Indeed, the success of climate alarmism can be counted in the increased federal spending on climate research from a few hundred million dollars pre-1990 to $1.7 billion today.”

 

Dr. Lindzen then makes one of the most remarkable indictments of the scientific community supporting the current view of global warming: “But there is a more sinister side to this feeding frenzy.  Scientists who dissent from the alarmism have seen their grant funds disappear, their work derided, and themselves libeled as industry stooges, scientific hacks or worse.  Consequently, lies about climate change gain credence even when they fly in the face of the science that supposedly is their basis.”

 

Source: “Climate of Fear,” Wall Street Journal, April 12, 2006

The Sorry State of the Current US Tax Code

Newsweek columnist Robert Samuelson paints quite an unfortunate picture of the current US tax code in this column.  A few of the key points that Mr. Samuelson makes in this article are: (1) “compliance with the current tax code costs about $150 billion annually for taxpayers to comply, a figure roughly equal to all household spending on electricity ($121 billion in 2004); (2) the current tax code is so complicated that about 60 percent of taxpayers rely on professionals to do their returns; and (3) it creates perpetual uncertainty, because Congress constantly tinkers with tax provisions (since 1986, there have been 15,000 changes).... By making the tax system more confusing and less conducive to economic growth, it sows public cynicism and discontent.”

Transnationalism

John Leo of US News covers some interesting political territory in his article on transnationalism. Even though the article deals primarily with immigration reform, the issue of transnationalism is certainly a political principle that exceeds the boundaries of discussions on immigration.

Kevin & Brit at Phantom of the Opera in NYC

Late December 2005. The show was fantastic!

Global Warming...?

George Will's article in the Washington Post on the subject of global warming is one of the best in recent memory.  It is a very concise summary of some of the contradictory statements and remaining questions regarding this phenomena.