Obama the windfall profit tax fairy

Barack Obama has been toying with the idea of imposing a tax on windfall profits on US oil companies, and it will be a part of his presidential platform (http://www.reuters.com/article/topNews/idUSWAT00963020080609?feedType=RSS&feedName=topNews&rpc=22&sp=true) Take a look at this latest statement he made in Raleigh, North Carolina.  He said, “I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills.”  Gee, that sounds like a wealth distribution plan if I’ve ever heard one.  Rob from the rich to give to the “poor.” 

This term “windfall profits” has become another buzzword for liberals, and particularly the Barack Obama campaign.  A majority of Americans probably couldn’t tell you the first thing about windfall profits … but the word inflicts these feelings of evil and wealth envy.  Therefore, the Obama campaign will continue to use this fancy term to get you all riled up.  Politicians are good at that.

Once again we run up against the economic ignorance of the American people as they give in to this nonesensical rhetoric.  Wrong!

Hopefully most Americans have enough economic smarts to know that the profits from these oil companies belong to the shareholders.  Problem is, these people probably think that the shares in these oil companies are fat-cat insiders just reaping millions a year from their investments.

 

Throughout the oil and natural gas industries only about 1.5% of the stock is owned by company executives.  Now this statistic doesn’t come from the oil companies themselves, the numbers – and the numbers that follow – come from Bill Clinton’s undersecretary of commerce for economic affairs; one Robert J. Shapiro (http://www.energytomorrow.org/media_center/Shapiro_Pham_Study.pdf).

 

Here’s what Shapiro has to say about the ownership of the other 98.5% of oil company shares:  “The data show that ownership of industry shares is broadly middle class, with the majority of industry shares held by institutional investors, often on behalf of millions of Americans through mutual funds, pension funds and individual retirement accounts.”

Again … from the Shapiro study:

  • Almost 43 percent of oil and natural gas company shares are owned by mutual funds and asset management companies that have mutual funds. Mutual funds manage accounts for 55 million U.S. households with a median income of $68,700.
  • Twenty seven percent of shares are owned by other institutional investors like pension funds. In 2004, more than 2,600 pension funds run by federal, state and local governments held almost $64 billion in shares of U.S. oil and natural gas companies. These funds represent the major retirement security for the nation’s current and retired soldiers, teachers, and police and fire personnel at every level of government.
  • Fourteen percent of shares are held in IRA and other personal retirement accounts. Forty five million U.S. households have IRA and other personal retirement accounts, with an average account value of just over $22,000.

 Someone once said that it is too bad that stupidity is not painful.  Well, in this case, it is painful how stupid people must be to think that a windfall profits tax is going to make energy and gas more affordable.

It is too bad that Obama is just another politician despite the nonsense that he spews.

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