Originally Posted by kgpoolerev

Both Clinton and Obama are running numerous ads talking about taking big oils windfall profits. Which should beg the questions what is a windfall profit? How much an increase in profit is allowed? Should all companies big and small be hit with the windfall profit tax?

I am going to go under the assumption that no one is aware of how much money Exxon made last year or the year before. As Obama loves to mention Exxon specifically I will stick with Exxon. In 2006 Exxon had sales totaling 377 billion dollars with a net profit of 39.5 billion so there was a margin of 10.47%. In 2007 Exxon's sales went up 7.4% to 405 billion with profit going up 2.8% to 40.61 billion or 10.02% margin. To put that into perspective Berkshire Hathaway had sales of 118 billion with 13.21 billion in profit for 11.1% margin a growth of 20% from the prior year.

40 billion is a lot of money. But at 10% they are hardly turning a huge profit. Obama and Clinton are demagoguing the issues by just talking about the 40 billion. Exxon has responsiblities to their shareholders to maximize their profit yet Exxon lowered their profit margin in 2007.

So what is a windfall profit? Exxon's profit grew by 2.8% while Berkershire Hathaway grew by 20%. Why is Exxon's a windfall? Berkshire Hathaway had a profit margin of 11.1% while Exxon's was only 10.02%. Why is Exxon's a windfall? Would Conoco Phillips have a windfall tax since they are a big oil company? Their profit was down 24% to 11.89 billion due to Hugo seizing assests. These are all rhetorical questions as we all know that Exxon is not making windfall profits.

Big oil makes less off of a gallon of gasoline than the combination of state and federal taxes. In Nc the state taxes alone top what big oil makes per gallon.

Worse the windfall taxes are a back door tax on the consumers as Exxon will still make 10% off their investments in 2008. In order to make the same percent in profit they will be compelled to raise prices which will then lead to higher windfall taxes.