

Billonaire T. Boone Pickens bets big on wind energy








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RE: The real benefit...
By smitty3268 on 5/27/2008 8:36:43 PM , Rating: 2
Billionaires can take tax payer money to help make more billions, but only if its not in oil?

I also think that's pretty stupid, although it's not really an unusual viewpoint that government should encourage certain policies, no matter who is doing it.

Then provide evidence that oil companies are getting an unfair tax advantage.

The oil companies specifically get huge tax huge tax windfalls, that's all the proof I need. They're some of the most profitable companies in the world - why do they deserve my tax money, when it could be part of a tax cut for me instead.

windfall profits taxes just discourage domestic production and provide a benefit to oil importers.

I have mixed feelings about a windfall tax, as there are pros and cons like almost everything in government. However, on the whole I tend to agree. If the oil companies suddenly jack prices way up for no reason, then we talk windfall taxes. Until then, if the free market seems to be working government should just stay out of the way.

RE: The real benefit...
By phxfreddy on 5/28/2008 12:08:02 AM , Rating: 2
Its good to give money to Big Oil

Government gives nothing for your toil

A tax? A fee? Tack on the bottom line

Its only you the buyer more in a bind

From Exxon we get petrolatum in The Pounder size

And thus my right arm gets its exercise!

RE: The real benefit...
By Ringold on 5/28/2008 4:30:10 AM , Rating: 6

If that were a homework question, you'd of failed. You made an accusation, and then didn't provide the data.

Right off the top, I'll point out in 2006 (when oil was comparatively cheap), oil companies paid $138 billion in taxes, compared to $136b payed by the bottom 75% of tax payers.

Yahoo Finance and immediately provides some quick data, like Exxon Mobil's mediocre profit margins. Less than 11%, compared to GE's 12.68%, Apple's 15%, Intel's 17%, etc. A higher tax rate would just punish its size, but size provides efficiencies of scale -- and lower costs for consumers in the end (higher production).

But lets look at income statements.

Dec 31 07 Revenue: 404 billion
Operating Expenses: 334 billion
Income: 70 billion
Income taxes: 30 billion (a hair less)
Effective tax rate: 42.38 %

Oh, dear. I thought the corporate tax rate was 35%. Where are these tax breaks? Maybe other companies pay more as well?

GE? 15.53%
IR? 18%
Apple? 29%
Walmart? 33%

I picked an industrial, construction, tech and a retailer. Only Walmart, oddly, comes close, despite having the lowest profit margins of the bunch. Still far lower than 42%.

All of the above I got from either or Yahoo, depending on which site wanted to work at that given moment. Not a right-wing blogs data, not American Petroleum Institutes data, but raw data. calculates the rates for you, Yahoo makes you whip out a calculator.

Do it for yourself and you too, hopefully, will wonder where these mythical tax breaks show up since the oil industry pays out the nose already compared to the rest of corporate America.

Oh, and in case you thought I cherry-picked Exxon, Chevron's effective tax rate is 46.9%.

We could surely soak them for even more, but remember, extraction costs are getting higher, not lower. Engineers specializing in that field are scarce, equipment is expensive, and PBR has NOV oil rig production booked for years in to the future alone. The less money they have to invest in drilling, the less they'll produce. The less oil comes to market, the higher the price.

I dont know how much air time it got in the mainstream media, but Russia recently changed its taxes to encourage more production. How? Tax cut.

Amazing that former communists have a deeper understanding of economics than Americans who were born in a capitalist state to begin with.


So, despite the fact it'd have the net effect of increased dependency on foreign oil, you're in favor. At any rate, oil companies have no control over the price, buyers set the price competitively. Want lower prices? Pump more, or ask, very nicely, China to stop raising so many people from poverty.

RE: The real benefit...
By masher2 (blog) on 5/28/2008 9:25:13 AM , Rating: 2
> "Effective tax rate: 42.38 % "

Excellent post. Nothing explodes the myth of "big oil tax breaks" like hard data.

RE: The real benefit...

thank you for taking the time to present some facts.

RE: The real benefit...
By Keeir on 5/28/2008 12:34:07 PM , Rating: 2
I would like to add that additional industry wide taxes tend to only raise consumer prices, IE, if we raised the taxes on the oil/gas companies, we would just end up paying more for gasoline/oil etc as a percentage of the tax would be directly passed to the consumer based on the shape of the demand curve. Given the rather sharp slope of the demand curve for these products, I would think nearly 100% of any new taxes on the oil/gas industry would go directly into raised prices. The actual dollar amount that each company makes would be relatively unaffected.

RE: The real benefit...


RE: The real benefit...

Oil companies do not set the price of their oil.


RE: The real benefit...
By BMFPitt on 5/28/2008 3:56:00 PM , Rating: 2
Effective tax rate: 42.38%
I'd like to question how these numbers were arrived at. I know that many forgien nations with oil charge a 90% "tax" on oil exports, which is just another way of saying "you can keep 10% of our oil if you drill it for us."

I agree that a windfall profits tax is as dumb and counterproductive as a gas tax holiday, but I find it incredibly unlikely that U.S. corporate taxes are hitting them for over 40% given my understanding of the business. There's got to be some creative accounting going on to get those numbers.

RE: The real benefit...
By Ringold on 5/28/2008 10:20:09 PM , Rating: 2
Well, revenue is a straightforward definition. Revenue - Expenses = Income, then I divided their tax payout by their income. I'm not an accountant, but that's how calculated it, and it seems proper.

The only place where I can see something strange happening is what they call operating expenses.

The overall figure doesn't shock me, though. The base corporate tax rate is 35%, and decades of manipulation by both lobbyists of industry and lobbyists from various extreme political groups has led to big variations and industry-specific rules. 42% is only 7% above the base rate, a 7% penalty seems low for a firm that has been so hated for so long by so many different people.

Also, I spent time in Google and found people citeing the average tax rate for the entire industry going back several years, as soon as the industry got to be in popular political cross hairs.

Can look for yourself, perhaps someone a little familiar with corporate accounting could explain how they've become so shafted, but just looking over their financial statements 42% appears the proper number, and it seems to jive with everything else in their statements. Given their revenue, their cash flow isn't eye-popping. (Indeed, at the end of the day, they're adding debt) At the very least, I see little evidence of favorable net treatment, which was the point in contention.

