Can someone explain how this works and the negative effect it will have on the economy in Texas and Houston in particular. My understanding is that it did not work when Carter enacted it back in 1980.
So no one has a good explanation of windfall profit taxes? I'm really not that clear. My boss just mentioned how last time most people were getting pay cuts, no bonuses and just happy not to lose their job. Oil and gas companies were not doing as much exploration and drilling and our dependency on foreign oil grew. I was hoping to get others that had gone through it or know more about to give a better explanation. I don't have much knowledge of it.
Bascially the government will charge the oil companies extra tax to take away some of the extremely high profit margin. But it won't happen at the current market condition.
Yes, like what the oil companies were gettting last year. They are probably not going to get no where near that this year. Sorry maybe not percentage margin, but in term of net profit, it is unheard of before.
There is your problem. Non finance people making financial decisions. The net profit was huge, but they spent huge amounts of money and are huge companies to make that huge net profit. That's why we look at profit margin. The problem is that none of the oil companies have an extremely high profit margin, with most of their margins being in the 10-12% range. This is right in line with many other companies that nobody ever talks about with a "windfall tax." Besides, that money gets taxed anyways when it used in salaries and shareholder dividends. A perfect example is Exxon Mobil. Everybody looks at the record profits in real dollars, but not in profit margin. Their profit margin is good, but not something out of line enough to tax extra. Everybody also forgets that Exxon Mobil makes big profit because they are a HUGE company, the second largest in the world. They are actually two huge companies in actuality, when the merged with things weren't going so well for the oil industry. Also, if a windfall tax were to happen, who pays? The shareholders of the company? No. You will pay, in higher prices. And the employees will pay, in the form of layoffs. When Carter implemented windfall taxes in the early 1980s, Houston busted and tens if not hundreds of thousands lost their jobs.
Their profit margin is around 8 percent so if that is extremely high, pretty much every industry is going to be taxed on "windfall profits."
Let me put it this way. if we had to import wheat and other agicultural products from other countries because we do not produce them here and those countries used to charge us X dollars a bushel now they decide to charge us 30 X dollars a bushel. Should the food processing industry still make a 5% margin now same as they did when the price was X dollars a bushel? What about if the price reaches 100 X dollars a bushel?
Ok, we will just have agree to disagree then. There are products like food that you can not live without. So if you cannot afford it, you should just die I get it, thanks.
Not to the degree of food, but over the short term, it could be extremely hard for people to go without due to lack of public transportation, cannot afford to buy more efficient vehicles, could not find closer place to work that's cheap enough. As we can see, with enough time, the demand for gas is elastic as current market condition shows. But I hope we day the United States can totally get away from this gas energy to some other renewalable energy that can be produced in this country.
Some of the wells oil companies are drilling today costs 4-8 million dollars just to drill the hole. It takes quite a few barrels to pay for that.
I think that Whole Foods, Starbucks and Apple should pay a windfall profit tax. These unscrupulous capitalist pigs have incredible profit margins on their products! Look at the profit margin of Kroger, Dunkin Donuts and Dell relative to these three monsters!!
