Blogs For Victory

The Wall Street Journal wonders:

The “windfall profits” tax is back, with Barack Obama stumping again to apply it to a handful of big oil companies. Which raises a few questions: What is a “windfall” profit anyway? How does it differ from your everyday, run of the mill profit? Is it some absolute number, a matter of return on equity or sales — or does it merely depend on who earns it?

Enquiring entrepreneurs want to know. Unfortunately, Mr. Obama’s “emergency” plan, announced on Friday, doesn’t offer any clarity. To pay for “stimulus” checks of $1,000 for families and $500 for individuals, the Senator says government would take “a reasonable share” of oil company profits.

Mr. Obama didn’t bother to define “reasonable,” and neither did Dick Durbin, the second-ranking Senate Democrat, when he recently declared that “The oil companies need to know that there is a limit on how much profit they can take in this economy.” Really? This extraordinary redefinition of free-market success could use some parsing.

Take Exxon Mobil, which on Thursday reported the highest quarterly profit ever and is the main target of any “windfall” tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we’re missing some Obama-Durbin business subtlety.

Why are Obama and his Democrats calling for a windfall profits tax on oil companies?

1. Because they still believe that class warfare works at the voting booth.

2. Because, quite honestly, they don’t know what else they should do.

Suppose Obama and his Democrats get their wish and soak Exxon for $100 billion. So what? By my rough calculation that works out to a figure equal to 3.33% of the annual Federal budget…and as that would be an increase of $35-odd billion, we’re really talking about increasing revenues by 1%…and that, of course, is to ignore the fact that if we tax away most of Exxon’s profits, we swiftly won’t have anymore Exxon profits to tax. As most, we’d realise about, say, $50 billion in additional revenue over a two or three year period. What is that supposed to accomplish? Especially as Exxon lays off workers and oil suppliers start to refuse to sell to America because they can make more profit selling elsewhere? As you stand in line to buy rationed gasoline in order to drive to the unemployment office, are you really going to feel better thinking that at least Obama “got” those greedy SOBs in Big Oil?

Keep in mind that I’m no fan of corporate America – after working for the past 7+ years in corporate America I can say with certainty that there’s nothing quite so contemptible as a large corporation…in fact, so bad are they that the only thing worse than Big Corporation is Big Government. Corporations at least produce some useful product or service – Big Government merely produces more government. Once I figure out a way to break up the large corporations without dislocating the economy, I’m on it for all I’m worth – but, meanwhile, the cretinous corporate behemoths are just part of the landscape (sort of like landfills on the otherwise pristine landscape of free market economics), and if you think they will behave in an irrationally self-destructive manner to please a President Obama, then you’ve got rocks in your head (they will, of course, continue to be irrationally self-destructive on their own hook, but that won’t help Obama and his Democrats).

The fairy tale world of Obama and his Democrats in on display here – they live in a world where Evil Corporations make life miserable for Little Workers and what is needed is Selfless Liberals to save the day. Thing is, you’re just as likely to find a pinhead on the production line as in the corporate boardroom – or in the Executive Branch of the United States government. People are people and a certain percentage of them, at any given time, are being complete boneheads (yes, yours truly, included). To assign to a class of people virtue or vice is as stupid as assigning to various skin colors certain advantages or disadvantages – we have to take things as they are and judge each person’s actions on the merits of their case. If a corporate boss is being a rapacious, greedy SOB, then we should point that out and work to thwart him – but because one creep is a CEO it doesn’t follow that all CEO’s are creeps. Nor should we think that being poor automatically means being virtuous – some poor people are poor because they are shiftless, ya know? Given this reality, the last thing we need is a bunch of liberals coming to save the day – by punishing corporations they will be taking a stripe off the good and the bad, and by pouring out funds on the poor indiscriminately they’ll be benefiting both the hard worker and the layabout.

Leave off schemes to tax corporations – it serves no useful purpose. Heck, any addtional taxation will just be passed on to the consumer, anyways in the form of lower wages, higher prices, lower employment or a combination of all three. Leave aside the nursery-room fairy tales from the Marxist-Leninist view of economics. Deal with things as they are – if you really want to do something to make oil companies less profitible, invest your efforts in finding larger sources of oil and alternatives to same. That will cut into Exxon’s profits more usefully than any windfall profits scheme, as well as doing something good for everyone.