Sophistry is used by Obama, the Democrats and even some Republicans to vilify very successful companies dealing with crucial commodities – like gas. Opponents and demagogues portray the $10.65 billion profit of Exxon Mobile as obscene and rapacious – and demand that punitive actions such as windfall profits taxes be imposed in order to “recoup” what shouldn’t be theirs.
This is an essential component of the Democratic Party’s ideology - punishing those individuals and companies that are successful and ironically, pay inordinate amounts of taxes to begin with.
In contrast, what has Government Motors (GM), a government and union favorite and perennial loser, done for us lately?
How about cost the American taxpayer tens of billions of dollars that we will never see again. A failed company on life support (thanks to Federal government) that should have been allowed to fail and close or markedly downsize that is persistently sucking out rather than contributing tax dollars.
The editorial below places this deception into proper perspective. We will add one more element. Though not entirely linear, if Exxon Mobil had produced only one fifth the amount of oil that it actually did, its profit would have been only be around $2 billion – not so excessive sounding. However, this would have also translated into a higher cost of a gallon of gas (due to supply and demand issues) and its tax “contribution” to our government would have been billions of dollars lower.
Seen And Obscene
Investor’s Business Daily 04/28/2011
Earnings: A few oil firms post what some call outrageous profits. How long before the uninformed and envious demand these companies pay a windfall profits tax?
Exxon Mobil, the largest oil company in the U.S., reported Thursday a first-quarter profit of $10.65 billion, or $2.14 a share, up 61% from a strong year-earlier period. Royal Dutch Shell came in at $8.78 billion, or $1.76 a share, up 68%. And on Friday, Chevron is expected to post a 27% increase in earnings to $5.69 billion, or $3 a share.
Speaking for the anti-capitalist, anti-corporate wing of his party (it's a big wing), Rep. Maurice Hinchey, D-N.Y., called Exxon's profits "obscene" and claimed that "Big Oil" is "robbing" the middle class.
Two days earlier, ABC's Jonathan Karl displayed the bias widely found in his profession when he, too, asked if there is something "obscene" about high oil and gas profits "when Americans are struggling just to fill up the tank."
While billions in profits might seem a little much, let's take a look at the context.
Exxon earned $10.65 billion on $114 billion in revenue. Shell's $8.78 billion profit came on $114.84 billion in revenue. Chevron's expected top line of $66.62 billion will likely yield a bottom line of $5.69 billion. These are not outsize margins — roughly 9% after taxes in the case of Exxon, less than 5% for Shell and 8.5% for Chevron.
In comparison, Apple made $6 billion on revenue of $24.7 billion, a profit margin of almost 25% in the first quarter. Google's profit margin for the same period was nearly 27%. Too high-tech for you? McDonald's makes 20 cents on the dollar. Where is the outrage over their profits? Aren't they committing robbery too?
Also lost in the rush to demonize oil companies is historical context. What some would say are large profits simply aren't inevitable. The oil industry has gone through periods of low profits before and will again.
Further, there's a (probably willful) misreading on the left and in the media of oil company profits. They aren't squandered by rich executives but paid to investors — some of them Democrats — and plowed back into producing more energy. If profits are taxed more, investors are hurt, as are consumers who pay higher prices due to energy scarcity caused by curtailed development.
"Obscene" profits? A need for punitive taxes on oil companies? The facts show the Democrats and the media (but we repeat ourselves) are wrong on both counts.
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Rep. Paul Ryan (R.-WI), Chairman of the House Budget Committee, has proposed massive, desperately need federal government spending cuts as well as tax rate reductions in his “Road to Prosperity”. Troves of empirical data support this approach – benefiting all except the demagogic Liberal politicians.
The vast majority of the Democrats still irrationally support continued unrestrained federal spending and high and increasing taxes, tax rates and fees. They never can have enough of other people’s money to spend. A larger, more controlling and intrusive government that knows best is their ideology. Control the masses, engender their dependency and buy votes by wealth transfer from those who work, particularly the higher wage earners.
Cal Vs. Krug
Investor’s Business Daily 04/11/2011
Taxes And Spending: House Budget Committee Chairman Paul Ryan's bold entitlement reform plan goes beyond taming spending. It recognizes that the history of cutting taxes vindicates Calvin Coolidge, not Paul Krugman.
Rep. Ryan has emerged as someone the country has been waiting for: a fearless, energetic politician with the guts to propose a detailed reform of the out-of-control, until-now-untouchable federal mandatory spending programs. Medicare, Medicaid and Social Security, with their annual automatic spending increases, now make up roughly 60% of outlays.
Some might find irony in Ryan ending up as spending hawk-in-chief, since back in the 1990s he was an aide to supply-side icons like Jack Kemp and Bob Kasten. Both were accused of caring too little about spending cuts as they fought for tax cuts to grow the economy and create millions of private jobs.
Today, after years of unchecked Democratic control of Congress and the White House, the problem of untamed government spending has become a runaway locomotive hurtling us toward a fiscal cliff.
The American public has reacted, spawning the populist Tea Party movement. And in this new environment, tax-cutting politicians are also spending-cutters.
But Ryan still recognizes, as did Kemp and Kasten, that low tax rates are key to restoring the greatness and vibrancy of the U.S. economy.
So when the New York Times' spending-addict columnist Paul Krugman launched his error-riddled attack on Ryan's plan last week, his first volley targeted not spending but Ryan's tax cuts. Ryan would bring both the individual top tax rate and the soon-to-be-highest-in-the-world U.S. corporate tax rate down to 25%.
According to Krugman, "Republicans have once again gone all in for voodoo economics — the claim, refuted by experience, that tax cuts pay for themselves" because they "would set off a gigantic boom."
It's so many years after Ronald Reagan's tax cuts produced the longest peacetime economic expansion in history — extending past the brief George H.W. Bush recession to the Internet revolution of the 1990s. One might have hoped that the losers of the tax-cut debate would, by now, have gone the way of the Berlin Wall.
But then, had history been heeded, the Krugmans actually would have been laughed off the political stage long before Reagan. John F. Kennedy knew when he bucked fiscal liberals in his party and pushed hard for cutting tax rates — including those on high incomes — that President Calvin Coolidge had proved tax cuts do exactly what Krugman says they don't: produce new jobs and fill government coffers with new revenues.
As Veronique de Rugy, senior research fellow at George Mason University's Mercatus Center, pointed out in a paper for the Cato Institute, "detailed Internal Revenue Service data show that the across-the-board rate cuts of the early 1920s — including large cuts at the top end — resulted in greater tax payments and a larger tax share paid by those with high incomes."
De Rugy found that as "the marginal tax rate on those high-income earners was cut sharply from 60% or more (to a maximum of 73%) to just 25%, taxes paid by that group soared from roughly $300 million to $700 million per year." From 1922 to 1929, real GNP grew 4.7% a year and unemployment fell from 6.7% to 3.2%.
What Krugman mocks as "trickle-down" was actually a tsunami of prosperity that expanded by 84% those making between $10,000 and $100,000 annually.
Taxes and spending can't be divorced. The Krugman way of big spending and high tax rates condemns future generations to never-ending government dependency.
Ryan's way not only reforms and saves entitlements. It saves us from the left's goal of a Europeanized American economy.
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Though Democrats don’t have a monopoly on tax cheats, it sure seems that way – particularly recently. Of course this behavior comports quite well with the arrogance and contemptuousness that they displayed for the American people when they had unopposed control of the federal government – both the House and Senate in Congress and the White House.
Why should they care very much if they raise taxes? After all, many are so wealthy that it affects them little. And besides, for those Democratic politicians who do actually pay their taxes, many have found loopholes and other stratagems in order not to pay their “fair share”.
Also by using this taxation power, they are in effect, “buying” voters (those that pay little or no taxes) who will keep them in office.
We, the productive citizens who are bearing an ever increasing tax burden to support these Democratic politicians and their “entitled” minions, need to assiduously work to make sure that they don’t get re-elected.
Investor's Business Daily 03/22/2011
Hypocrisy: A Missouri senator up for re-election is the latest administration crony to overlook or avoid paying all her taxes. Funny, they have no problem raising them on or collecting them from the rest of us.
If you ever wonder how we could find ourselves $14 trillion in debt and sinking fast, consider how fast and loose the mythical guardians of the public purse are with keeping their own finances in order and meeting their own tax obligations.
As Politico has reported, Sen. Claire McCaskill, D-Mo., said Monday that she will sell her private plane and pay $287,273 in back Missouri property taxes that somehow slipped her mind while she was supporting ObamaCare and spending the rest of us into oblivion.
"This is not good," McCaskill said during a conference call with reporters on Monday as she detailed the Missouri property taxes she owed: $72,790 in 2007, $74,699 in 2008, $69,394 in 2009 and $70,401 in 2010. Meanwhile, other Missouri property owners struggled to keep up with far lesser means.
The property taxes are owed on a plane — a 2001 single-engine, turbo-prop Pilatius PC-12 valued at $2.2 million — acquired in July 2006 during McCaskill's Senate run against Republican incumbent Jim Talent. It had been registered in Delaware, where no taxes were imposed. Then it was moved to Illinois, which imposes no personal property taxes on private aircraft.
Because planes are not licensed in Missouri, the state has no record of who owns them, so local governments — which levy property taxes — send no bills. As a result, McCaskill said, her husband and the company owning the plane had no knowledge that the property taxes were owed. Ignorance of the law, it is said, is no excuse, especially if you're the state's U.S. senator.
McCaskill's family opted to move it in 2007 to Spirit of St. Louis Airport in St. Louis County. As a senator, McCaskill has flown at least 89 flights chartered by Sunset Cove Associates LLC — a company incorporated in 2002 by her husband, St. Louis businessman Joe Shepard, according to records kept by the Missouri secretary of state's office.
The senator had used the plane she co-owns with her husband and other investors for political purposes, paying for the travel with taxpayer money from her Senate office, which she now calls a "mistake," for which she will reimburse the government nearly $89,000.
McCaskill recently co-sponsored a bill in the Senate that would send pink slips to federal employees who are found to have unpaid taxes. This was the situation Treasury Secretary Timothy Geithner was found in during his confirmation hearings in which he was touted as the only person on the planet capable of leading us back to financial stability.
It was revealed that Geithner had since 2001 failed to pay nearly $40,000 in Social Security and Medicare taxes because he worked for the International Monetary Fund, which conveniently failed to withhold those taxes as U.S. firms do. Like McCaskill, Geithner forgot to check.
Rep. Charles Rangel, D-N.Y., lost his post as chairman of the tax-writing Ways and Means Committee after it became known that he failed to pay 20 years of back taxes on a Caribbean villa, on top of tax issues related to four rent-controlled apartments in Harlem used by his campaign.
Then there's Massachusetts Sen. John Kerry, who docked his family's new $7 million yacht in neighboring Rhode Island, letting him avoid paying roughly $500,000 in taxes to his cash-strapped home state, where honest taxpayers were struggling to put ketchup on the table.
The power to tax is the power to destroy. It also is an opportunity for hypocrites to benefit at taxpayers' expense, an act that calls for removal from areas of control over the public purse.
If they can't run their own affairs cleanly and openly, they shouldn't run ours.
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