Call me a thief. I am about to steal stuff from an editorial in Investors Business Daily. But the theft is for a good cause. It is to reveal a bunch of politicians as demagogues.
When it comes to oil companies, the pols love to stir resentment among voters. Rep. Ed Markey tells us “oil companies are turning the American consumer upside down at the pump, shaking out every last cent.” This is a lie and he knows it.
He calls Exxon-Mobil profits “outlandish.” Rep. Maurice Hinchey calls such profits “obscene” and claims the company has “crossed the moral threshold”. Senator Clinton tells us oil company profits are so evil she wants to seize them.
These pols have lots of company in Congress when it comes to screaming about oil company profits.
IBD reminds us plenty of bobbing heads and columnists and think-tank guys parrot the politicians insults. And they are insults. And they spew from the mouths of demagogues.
I don’t bandy that term lightly. Look it up. When you have finished this piece I bet you will agree with me.
From 1977 to 2004 U.S. oil companies made $630 billion profit. Before they got to that bottom line they paid $518 billion in federal and state corporate taxes.
Now, who is ripping off whom?
These companies invest fortunes to search for oil. To find it, to drill for it. To refine it and deliver it. They take unbelievably huge risks. They made $630 billion profit for their efforts.
Meanwhile, thanks to pols like those above, government hit them with $518 billion taxes. Government that did virtually nothing to find and deliver that oil. It hit up oil profits at the rate of 45%.
Wait! Over the same years governments took in another $1.34 trillion in excise fuel taxes. The oil companies had to collect that money and pass it on to governments.
In other words, governments grabbed nearly $2 trillion in taxes on oil and oil company profits. While oil companies made less than a third of what governments collected.
Politicians know this. They pick on oil companies because they are so easy for voters to hate. Especially when politicians urge them to. Demagogues.
Exxon-Mobil’s profits aroused the latest round of insults. This year they will make about $41 billion profit. They will pay $30 billion in taxes. In 2006 the company earned - and I mean earned - $40 billion. Government confiscated 28 billion from the company.
IBD put these amounts into perspective.
Take half the tax returns Americans filed in 2006. Those taxpayers paid $27 billion in federal income taxes. Half our taxpayers paid taxes of $27 billion.
Exxon-Mobil paid $28 billion.
The taxpayers paid at the rate of about 3%. (Yes, half our taxpayers barely pay income tax.) The oil company paid at a rate over 40%.
Exxon-Mobil paid more than half our taxpayers combined did. Just one oil company. Paid more than the IRS collected on 65 million individual tax returns. Representing probably 100 million people.
Politicians know these figures. They know oil company profits keep the government afloat. When they attack them they practice demagogery.
They also know those profits get plowed back into drilling and research. They also get shipped out to millions of 401k plans and endowment funds in the form of dividends. And they know who owns those endowments. Churches do, and universities, and hospitals and charities of all stripe.
They also know who owns the 401k plans. Many of them are the voters. Voters to whom they spew lies about oil company profits.
Oil companies are a blessing. They deliver fuel at prices lower than bottled water. And they provide a gusher of money for our government to spend on its myriad programs.
From Tom ... as in Morgan.
For more columns and for Tom’s radio shows (and to write to Tom): tomasinmorgan.com.