Gas Windfall Tax

One thing that is becoming popular of late is wanting to force an earnings cap on private companies. It's under the guise of helping Americans because the "official" target is "Big Oil." Yesterday, I heard Rush Limbaugh give a statistic that "Big Oil" earns 10 cents on every gallon of gas sold and that "Big Government" earns 45 cents. I thought this was really strange and that Big Oil had to make more than this, but I didn't feel like researching it. Well, this morning I noticed The real windfall in my Bloglines from the Mises Institute (an economics website).

Last week, after Exxon Mobil (XOM) published record quarterly profits of $9.9 billion, Senate Majority Leader Bill Frist called for hearings to see whether a windfall profits tax should be imposed. Checking the SEC 10-Q filing reveals the following:



Now, let's break this down.

Exxon Mobil paid $25.8 BILLION in taxes the 3rd Quarter. They were in a 41.8% tax bracket. This means that they took in about $61.7 Billion and were left with around $35.9 Billion. After their expenditures, they profited less than 17% of their total earnings.

Finally, the citizens and government officials seem to be really upset that Exxon Mobil made nearly $10 Billion in the quarter. Putting this chart to practical use, please note that the Government profited $4 Billion more in 3Q 2005 than in 3Q 2004. We have to have some accountability here. The government took in nearly three times more money ($25 Billion) than Exxon's net profits ($9.9 Billion) and they are wanting more.

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