What effect would a "windfall profits tax" have on oil companies?

Question

What effect would a "windfall profits tax" have on oil companies?

Answer 1

Zero, all it would do is make their accountants work a little harder on passing on this to us.  This is what happened when Carter did it in the seventies.

Answer 2

I really don't care.  They need to be investigated for price manipulation.  Why congress can spend time on steroids in baseball and not this is beyond me.

Answer 3

smellyfoot is not accurate:  Something CALLED a "windfall profits tax" was tried way back when, but it was not a tax on profits.  That was a per-barrel tax on oil, which made it a tax on production, which could be compensated for by raising prices.

A true windfall profits tax, if high enough, would be impossible to compensate for - you raise prices, you raise profits, you raise the amount of tax levied against you.

Oil companies all magically come in pretty much at the maximum they could without invoking the tax, probably.  They might do so by spending on things they'd eventually have to spend on anyway - upgraded technology, more drilling equipment (that they claim they don't have and can't afford, which is why they don't drill for the billions of barrels of oil they ALREADY have rights and leases for), and, anticipating the future, they'd probably increase their investment in green and renewable energy sources, so they can continue to be major players in the market when petroleum-based sources are not as monolithically dominant.

Answer 4

Decreased domestic produvtivity, leading to a decrease in expected tax revenues for the government. It will also lead to more dependance on foreign oil.

This was the result when the "windfall profit tax" was imposed in 1980, no signs that this failed idea would yeild any other results if regurgitated now.

Answer 5

It would serve as a disincentive to continue to raise prices.

What it isn't is a measure to eliminate profits, just keep them reasonable.  Whatever is above that is windfall.

Lets say that a company has a clock that costs $100 to make.

They sell it for $200.   They then decide to charge $260, and people still want it, so they charge $300.  Now people can no longer get to work on time and the trains stop running because people can't afford time, so the government steps in and say anything above $220 is windfall and is taxed higher.  So the company sees that there is no point to asking more and sticks to the $220 that gives them the most profit they can take.  They won't raise the price to cover a windfall profits tax because the increase in price won't go to them either.

Answer 6

Passed onto the public naturally, they are a business.

Answer 7

There is no such thing as a "windfall profit".  That is just a pretty name by the liberals to steal profits from private business.  The insurance companies, MacDonald's and all other business will be targeted next.  It was the system that was used by Hitlers government.