I spend alot of my time here ridiculing propositions by Democrats, reminding readers that many of their principles bear a slight resemblance to socialism. Rep. Paul Kanjorski (D-Pa) has finally pushed the envelope to far and announced to the world Democrats are nothing more than Marxists in nicer suits. Recently Rep Kanjorski has proposed the establishment of what he calls a “Reasonable Profits Board” which would determine what would be considered ‘rational earnings’, with any earnings above that number being penalized with a windfall tax.

Kanjorski, D-Nanticoke, was in town Monday to announce his introduction of House Resolution 5800, the Consumer Reasonable Energy Price Protection Act of 2008. The bill, introduced on the House floor April 15, would allow the federal government to tax windfall oil and gas profits resulting from historically high oil and gas prices that average Americans struggle to afford, he said.

Kanjorski said industries yield windfall profits when earnings exceed what a Reasonable Profits Board determines is rational, as laid out in the legislation.

The obligatory question which now must follow is, who will make up this board, and what calculations will they use to determine what is considered a reasonable profit? Will they look at the net income as a percent of revenue, or will they simply look at net income and ignore profit margins? My guess is that it would be the latter, and oil companies would eventually see their profit margins fall from around 9.5% where they are now, to the 5% level.

Kanjorski goes on:

In 2007, Kanjorski said the Big Five oil companies reported record profits, with Exxon Mobil making more than $40 billion — the largest corporate profit in American history. In a few days, Exxon is expected to announce its net income will rise around 22 percent. A windfall tax would help discourage these industries from consistently increasing their prices, the congressman said.

This is a common theme amongst Democrats who continue to paint oil companies as price gougers, relying on the average Americans ignorance to the truth of how oil prices are determined. Contrary to what Rep. Kanjorski and Barack Obama will tell you, oil prices are determined through an international commodities market, it is not set randomly by companies like Exxon. The only sure fire way to reduce the price of oil is to add to the supply, which Democrats have been fighting for years.

Democrats will claim they intend to pass legislation to lower gasoline prices, but if you look at their record you will see no evidence to back this up, in fact the exact oppossite is true. Democrats intend to control gasoline prices through taxation, however their answer seems to lie in and increase of taxes, as oppossed to a decrease in taxes. Anyone with an iota of common sense will realize that the way to reduce prices is not to increase the cost of doing business.

It is also important to note that the oil industry is already one of, if not the most heavily taxed industry. If you look at Exxon’s first qaurter earnings statement for 2008 you will indeed see their profit of $10.9 billion for the quarter. This is the number politicians wish for you to focus on so they continue to decry the greediness of these ‘evil oil companies’. The number they hope you never see, and the number the mainstream media continually ignores is towards the bottom of this report, and that number is $29.3 billion. $29.3 billion represents the total taxes paid by Exxon for the quarter, with $9.3 billion going to federal taxes, $8.4 billion in sales taxes and $11.6 billion for all other taxes. Incidentally, if you look at their year over year numbers you will also see that although their net income was up only 17%, Exxon paid 37% more in income taxes this year.

If however Rep. Kanjorski still insists on pushing his socialistic agenda of penalizing profits that exceed a certain level, I ask that he apply this tax to other areas of business as well. I believe trial lawyers would be an excellent place to start. Ask Rep. Kanjorski to justify multimillion dollar fees collected by attorneys and why they should not be subjected to a windfall profit tax as well.

Update: I just finished reading the text of the bill, and here is what I found:

`(3) APPLICABLE PERCENTAGE- The term `applicable percentage’ means–

`(A) 50 percent to the extent that the profit on the sale exceeds 100 percent of the reasonable profit on the sale but does not exceed 102 percent of the reasonable profit on the sale,

`(B) 75 percent to the extent that the profit on the sale exceeds 102 percent of the reasonable profit on the sale but does not exceed 105 percent of the reasonable profit on the sale, and

`(C) 100 percent to the extent that the profit on the sale exceeds 105 percent of the reasonable profit on the sale.

Hypothetically speaking, if the board had set a “resonable profit” of $20 billion for fiscal year 2007, Exxon Mobile would have had to pay an addittional $20 billion in “tax”. I chose to put the word tax in quotes here because when the government “taxes” you at 100%, it is not truly a tax, it is theft.

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Congress, Dumb Dems, Liberals, Politics, Taxes