Oil

I’m fairly dyscalculic and may be reading this wrong, but I think this Tax Prof post is (deliberately?) misleading.

[F]ederal and state taxes on gasoline production and imports have been climbing steadily since the late 1970s and now total roughly $58.4 billion. Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.

OK … they total more than twice the amount during that period. But I believe Democratic politicians are proposing a “windfall profits” tax on companies in the year 2005, not the last 28 years. As many have noticed, oil costs more in the year 2005 than it did before. Also in the year 2005, oil company profits are soaring to the tune of 65-75% over last year’s. Profits for just the third quarter at Exxon totaled $8.3 billion.

Again, maybe I’m wrong, since Glenn Reynolds seemed convinced by this. But Hindrocket is convinced too, which means I’m probably right.

3 thoughts on “Oil

  1. The Dems are selling their proposals as punishing oil companies for gauging consumers. The point of the Tax Foundation release is that government takes more from consumers than the supposedly rapacious oil companies. There are a number of reasons why the “windfall profits tax” idea is economically stupid (worse than a straight gas tax), even if it’s limited to 2005, which it isn’t; proposals vary from a 3-year to a permanent pseudo-price-control.

  2. OK, whether it’s a 3-year tax or price-control is quite important. But the fact that government took more from gas buyers than oil co’s on average between a set number of years still fails to prove that oil co’s are taking more from consumers now, right?

  3. Well, look at the the graph. The difference between oil industry profits and gas tax revenues is smaller than it’s been in some years, bigger than it’s been in others, and still smaller the government’s take. I don’t think citing the average is intended to mislead.

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