Democrat Energy Solution--Windfall Profits Tax will hurt America

Everyone now knows Exxon has made too much money. Exxon made $40.6 billion in 2007. The Democrats want to take a portion of their profits in the form of a windfall profits tax.

The dirty little secret is Exxon paid $30 billion in taxes. If you add in the capital gains taxes paid by stockholders on $10 billion of dividends, the total taxes is $32 billion.

The government is a large beneficiary to higher gas prices.

But the government must be very careful about losing all of this tax revenue over the next decade. Exxon Mobil is a global company. The majority of their supply of oil reserves are in places like Libya, Saudi Arabia and Khazakhastan. An ever increasing amount of their demand is from overseas such as China, India, and developing companies.

The risk of extreme losses and future write offs for companies like Exxon is very high. Along with higher rates paid for new oil leases caused by higher oil prices, the increased risk of doing business in totalitarian states is a serious threat to future profits of Exxon.

For example, last year, Venezuelan President Hugo Chavez nationalized all oil production facilities and cut off oil shipments to Exxon. Tens of billions of dollars of investment and future oil revenues have been put at risk. Russia, China and the Middle East exposes Exxon to the same investment risk.

Because Exxon is a global concern, the day is soon approaching that Exxon will not have an advantage to be an American Energy Company.

Whether we like it or not, our government will force Exxon to make a decision that no one will like. Pay more in taxes or move out of the country. Singapore, Liberia, Panama and the Bahamas will be happy to have Exxon as a corporate citizen and in a free market society, these countries are willing to tax corporations less (or not at all) than we are willing to tax them.

An example of businesses leaving the United States is the shipping industry. There isn't a single shipping or cruise line that pays taxes in the United States. The cruise line industry no longer pays income taxes in the United States. In order to be competitive in the industry, every major cruise line has moved to smaller countries that do not tax income. Further regulation and labor requirements in the United States have pushed the corporations offshore, and they took their profits with them.

It is not in our benefit to demonize any industry in our country, whether it is Microsoft, Pharmaceutical Companies or any of the few industries in our country that are making money. Democrats will propose to arbitrarily say how much a company should make. Companies will arbitrarily move out of our country.

Business in a competitive industry requires investment and returns. A trip to Detroit will show you the results of a union labor/government program gone awry. When worker rights are more important than profits, the business will not be able to sustain itself. Attack American business profit and you can expect businesses to retreat to other countries that are more business friendly.

This will be the result of a windfall profits tax.