Who does the windfall tax on profits hurt?
Presumptive nominee Barack Obama promises a windfall profits tax on American Oil companies. He claims this will force them to bring jobs back overseas and that the proposed tax will help the middle class, but Obama seems to be missing a major point in the situation.
Like many companies in America, a majority of these companies are traded on a stock exchange, whether that be AMEX, NYSE, or NASDAQ. Therefore, when these publicly traded corporations make a profit, those profits head to the shareholders in the form of dividends. And when they don’t get dividends, the value of the company often rises which gives the shareholder an increased value for their shares. (Sorry to go through the stock market tutorial, but the proponents of the policy seem to be missing it.)
Now, naturally (if you are a Democrat - I just cut Patrick deep there), you are picturing a few old rich men sitting around a table discussing how they will spend their enormous riches on this particular day. But that picture just isn’t so, as according to a recent study headed by Robert J. Shapiro, undersecretary of commerce for economic affairs under President Bill Clinton, the majority of shareholders in oil companies are “middle-class U.S. households with mutual fund investments, pension accounts, and small personal portfolios.”
What that political garble-jarble boils down to is that Barack Obama’s windfall profits tax will not force companies to bring back jobs, it will not force them to lower their prices because taxes are a cost and costs are met with rises in prices, and it will not hurt the wealthy. The windfall profits tax takes dollars directly from the working man, the middle class.
Does a hidden tax on the retirement funds of millions of Americans sound like a great idea? That’s change, but this tax just can’t be so.
To read the entire study: http://www.energytomorrow.com/media_center/Shapiro_Pham_Study.pdf
Tags: America, Barack Obama, Gas, IRS, Middle Class, obama, Oil, president, taxes
