Social Security

[sixdogsmom]

I do hope you are correct Waldo, I was just going by what I heard John McCain say.

[frawin]

THE GOVERNMENT DOES NOT AND HAS NEVER SUBSIDIZED THE OIL INDUSTRY,. EXXON MOBIL MADE 11.68 BILLION DOLLARS IN THE SECOND QUARTER AND PAID 32 BILLION IN TAXES , HOW CAN YOU SAY THEY ARE SUBSUDIZED, GET YOUR FACTS STRAIGHT. YOU KNOW ABSOLUTELY NOTHING ABOUT MARKET CAPITAL, AND WHERE THE MONEY COMES FROM HOW MUCH IS SPENT AND WHAT RISKS ARE TAKEN WHAT THERE CAPITAL OUTLAY IS.

[W. Gray]

Looks like he did say something along that line.

A web site says:
"He may extend the retirement age to 68 and reduce cost-of-living adjustments. He says point-blank that promises to retirees can't be kept. We can't keep promises made to retirees."

However, the annual cost of living adjustment law has been around since 1974 and would require Congressional action to make any changes.

I cannot see Nancy or Harry going along with him any time soon. They get too many senior citizen votes.

[srkruzich]

Looks like he did say something along that line.

A web site says:
"He may extend the retirement age to 68 and reduce cost-of-living adjustments. He says point-blank that promises to retirees can't be kept. We can't keep promises made to retirees."

However, the annual cost of living adjustment law has been around since 1974 and would require Congressional action to make any changes.

I cannot see Nancy or Harry going along with him any time soon. They get too many senior citizen votes.

I don't believe mcaine is that stupid either.  IF he touched Social Security there would be wor over it.  Seniors soon to be recipients would definately take up arms over it.

[sixdogsmom]

The oil industry currently receives 14 BILLION dollars yearly in tax breaks and incentives, I would consider that indeed a subsidy. I think you made a typo Frank, Exon Mobil did make over 11 BILLION dollars in profit last quarter, but I doubt that they paid 32 Billion in taxes. Even if they did pay that much, 11 BILLION dollars profit is a lot of money, and there is no reason that the American taxpayer should be subsidizing this industry.

[dnalexander]

SDM, I posted this else where on the forum. It gives a good general idea of Exxon's taxes profits etc compared to other industries.  I checked out the numbers listed in the article against stock info sites and the numbers in this article check out.

David


What Is a 'Windfall' Profit?
Wall Street Journal
August 4, 2008

The "windfall profits" tax is back, with Barack Obama stumping again to apply it to a handful of big oil companies. Which raises a few questions: What is a "windfall" profit anyway? How does it differ from your everyday, run of the mill profit? Is it some absolute number, a matter of return on equity or sales -- or does it merely depend on who earns it?

Enquiring entrepreneurs want to know. Unfortunately, Mr. Obama's "emergency" plan, announced on Friday, doesn't offer any clarity. To pay for "stimulus" checks of $1,000 for families and $500 for individuals, the Senator says government would take "a reasonable share" of oil company profits.
[Barack Obama]

Mr. Obama didn't bother to define "reasonable," and neither did Dick Durbin, the second-ranking Senate Democrat, when he recently declared that "The oil companies need to know that there is a limit on how much profit they can take in this economy." Really? This extraordinary redefinition of free-market success could use some parsing.

Take Exxon Mobil, which on Thursday reported the highest quarterly profit ever and is the main target of any "windfall" tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we're missing some Obama-Durbin business subtlety.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon's profits don't seem so large. Exxon's profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that's what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery -- both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau's industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

In a tax bill on oil earlier this summer, no fewer than 51 Senators voted to impose a 25% windfall tax on a U.S.-based oil company whose profits grew by more than 10% in a single year and wasn't investing enough in "renewable" energy. This suggests that a windfall is defined by profits growing too fast. No one knows where that 10% came from, besides political convenience. But if 10% is the new standard, the tech industry is going to have to rethink its growth arc. So will LG, the electronics company, which saw its profits grow by 505% in 2007. Abbott Laboratories hit 110%.

If Senator Obama is as exercised about "outrageous" profits as he says he is, he might also have to turn on a few liberal darlings. Oh, say, Berkshire Hathaway. Warren Buffett's outfit pulled in $11 billion last year, up 29% from 2006. Its profit margin -- if that's the relevant figure -- was 11.47%, which beats out the American oil majors.

Or consider Google, which earned a mere $4.2 billion but at a whopping 25.3% margin. Google earns far more from each of its sales dollars than does Exxon, but why doesn't Mr. Obama consider its advertising-search windfall worthy of special taxation?

The fun part about this game is anyone can play. Jim Johnson, formerly of Fannie Mae and formerly a political fixer for Mr. Obama, reaped a windfall before Fannie's multibillion-dollar accounting scandal. Bill Clinton took down as much as $15 million working as a rainmaker for billionaire financier Ron Burkle's Yucaipa Companies. This may be the very definition of "windfall."

General Electric profits by investing in the alternative energy technology that Mr. Obama says Congress should subsidize even more heavily than it already does. GE's profit margin in 2007 was 10.3%, about the same as profiteering Exxon's. Private-equity shops like Khosla Ventures and Kleiner Perkins, which recently hired Al Gore, also invest in alternative energy start-ups, though they keep their margins to themselves. We can safely assume their profits are lofty, much like those of George Soros's investment funds.

The point isn't that these folks (other than Mr. Clinton) have something to apologize for, or that these firms are somehow more "deserving" of windfall tax extortion than Big Oil. The point is that what constitutes an abnormal profit is entirely arbitrary. It is in the eye of the political beholder, who is usually looking to soak some unpopular business. In other words, a windfall is nothing more than a profit earned by a business that some politician dislikes. And a tax on that profit is merely a form of politically motivated expropriation.

It's what politicians do in Venezuela, not in a free country.

[sixdogsmom]

I understand this point of view, however that does not take into account that no matter what condition the economy is in this industry is going to profit on a finite product that is required for the well being of this nation. However the previous conversation had nothing to do with windfall, but income taxes and profits for the first quarter of this year. I am certainly no expert and do not pretend to be one, however I do read and try to be informed. I am certainly astounded that John McCain wants to balance the budget by placing the burden on middle class and seniors and continuing to bolster industrys with tax dollars whilst they are making record profits.

[Wilma]

I know this should go in the oil thread, but right now is the time that the question is entering my mind.  Are these huge profits before the cost of exploration or after?  The cost of exploration should be deductible on the corporations income tax returns, thus reducing the amount of taxes they have to pay.  If after deducting the cost of exploration, they still have to pay billions in taxes, they should be doing more exploration.

[DanCookson]

Government has no business telling any one company they make "too" much money and margin, no matter what area it is in.

For anyone in government to say that we are going to subsidize a "stimulus" check by taking a "reasonable" portion of a companies profits is criminal.  We do not live in a single class society.  If someone in this society wants better, then my advice is simple.  Either get off your ass and do something about it or don't.  Just don't expect to ride coat tails on people that are getting it done. 

I hope every American company and person makes 11 billion dollars!!  Isn't that what it's all about??  I would challenge any one person to reply to this and tell me that they have turned down a raise because it was just too much.  No, you wouldn't do that.  Wouldn't make any sense.  I don't see the Raytheon workers striking for less pay and benefits.  They are striking for more.  Free Market dictates all.  Supply and demand.

Raise taxes and tax revenue will fall.  It has happened every time it has been done in the past.  Lower taxes and tax revenue increases, as does productivity.  Why work when the gov't will pay you not too.

Kind of rambling, sorry not as good with analogies as pep, but I will keep trying.

[frawin]

Dan, you did fine and I love to see young people that are willing to work and earn a living, start their own business. The people talking about the so-called oil subsidy, know absolutely nothing about the size of the oil industry in America, it has a market cap of between one and two trillion dollars, compare that to the subsidy they keep making noise about, it is less than 1%. The subsidy is not a subsidy at all it is the tax break to write of dry-holes which are expensive and there is no way to recover a dry hole except through a tax write off. The oil industry is not just Exxon Mobil it is thousand of small operators and millions of people. I have seen investors and small operators loose everything they have exploring for oil and drilling dryholes. I am sick of the people and their attitudes that want to kill capitalism and put in Communism and Socialism in this country. Under our current Capitalism system every person has the opportunity to be what ever they want to be, they just have to work for it, under socialism everyone will be poor. Young people like you and many others that I see on this forum are the hope of the future, you are all willing to work hard and make your own destiny, instead of wanting the government to take from those that have worked hard to make more. People should look at where the tax revenue comes from in this country and they might think different. Our system has flaws in it but it is still the greatest system, greatest country and the greatest place to live on Earth hopefully we can keep it that way. I have been in lots of other countries and I can tell you there is no place out there with the standard of living, Medical Facilities, Doctors and opportunity that even comes close to comparing to what we have. People that want the goverment to control everything and give them their fair share should go to the countries where that is available, like Cuba, China, Russia, Angola, Nigeria, and others like them. I try to look past these people but I can't as I want my Children and Grandchildren to grow up and live in a Democracy, frr society where that can be anything they are will ing to work for.
ENOUGH SAID
THANKS DAN