Posted by
Matthew on Saturday, June 14, 2008 3:17:05 PM
Those evil, rich oil companies. How dare they make a really big profit? Let's stick it to them by taxing the obscene part of their profits.
I see a couple of problems with the opening paragraph here, not counting grammar and punctuation.
1) Big profit. Whenever someone starts using non-specific measures for what is acceptable or not, I get nervous. What is the magic number where profits move from acceptably large to grotesquely huge?
The old business joke's punchline says, "We may sell at a loss, but we'll make it up in volume." I would not suggest that the oil companies are selling at any kind of loss, but I would suggest that their margin is low. It is a high-volume business, and an expensive one to run. Look at profit margin, not just net profit.
2) Let's stick it to them. So let me understand; these companies are soulless slaves to profit, who can charge us whatever they want because they deal in a commodity we all need. Does that sum it up?
Okay, so let's say we tax them 50% on their profits above some magic number, say $2B just for argument. Um, what keeps them from just charging us more to cover the tax?
Congress has sticks (taxes) and carrots (tax breaks) to modify behavior. Every time it uses the stick of taxation to beat some evil company into doing the will of the Congress, one of two things happen; either the company/industry goes belly up, or the prices paid by the companies' customers raise to cover the tax.
Since it seems unlikely that anyone but a few in the 'green' army would really like to see the oil companies cease to exist, we are left with
two plausible explanations for why Congress would consider raising the taxes on big oil. Either the members of Congress want to try to refocus the national disgust off of their own incompetence and get us unified and angry against someone, anyone else ... or else they just don't have a clue as to who really gets hurt when they pull the trigger on a new tax.
I'm guessing 'clueless' is the answer for the majority of those who would support such a tax.