Oily Maneuver: 'Today' Hides How Gas Taxes Dwarf Profit

So much of the debate about high gasoline prices involve allegations that oil companies are 'gouging' and making 'windfall profits.' So if you were a TV show preparing a graphic display of the various components that add up to the price of gas at the pump, the one thing you would be sure to separately break out would be profit, wouldn't it?

Not if you're the Today show. Not if you want to camouflage the fact that, in fact, the government's take via taxes dwarfs the amount that the various levels of commerce take in profit.

In conjunction with the appearance of Chevron CEO David O'Reilly, this morning's 'Today' ran just such a graphic display of the components of the price of a gallon of gas. The first panel showed that the cost of crude oil contributes $1.67 per gallon. Next was taxes, 44 cents. Now, you might have thought that the final panel would have shown profit. But no. Instead of separating out profit, Today displayed a panel mystifyingly lumping in profit with "refining and transportation" for a total of 78 cents, or roughly double government's tax take.

The strategy seems clear. If shown separately, viewers would have seen that profit amounts to a fraction of taxes. Whoops - there goes the gouging/windfall taxes argument so dear to the MSM and politicians looking to deflect and demagaogue the issue. Better to lump in profit with a couple of entirely unrelated cost items to "pump up" the number and make it substantially higher than taxes.

Local, State and Federal Gas Taxes Consume 45.9 Cents Per Gallon on Average
Figure 2. Combined Local, State and Federal Gasoline Taxes, August 2005

Source: American Petroleum Institute, Tax Foundation.

Today, the combined burden of federal, state and local gas taxes costs American drivers an average of 45.9 cents on every gallon purchased. As Figure 2 illustrates, in some states the combined taxes exceed 60 cents for every gallon purchased. According to data on gasoline use from the U.S. Department of Transportation, that amounts to an annual gas tax burden of roughly $271 for every man, woman and child in the United States.

OK.

So, assume QUARTERLY profits are 1,000 million for oil company XYZ. (Hell, they've all merged anyway.)

Obviously, the MSM will claim this is obscene profits.

---

But ..........

There are 30-45% TAXES on the profits.

So, the 1,000 million in claimed profits are actually 600 million, right?

---

There are "payroll expenses" combined of (say) 20,000 million dollars for that same company.

BUT - payroll are taxed 5 times: first = the 35% by the IRS on the employee on what he or she takes home. Then on the Social Security (15 % combined by the company and the employee), then as a percent again by the fed's again for Medicare taxes.

Then add state income taxes on the employee and state income taxes on the business to that mix: you add two more layers of taxes.

So out of that 20,000 million in "payroll" costs, can we assume that 6,000 of that 20,000 million is MORE TAXES.

There are "refining expenses" of 20,000 million dollars - for capital investment (more taxes) and the cost of fuel to separate the oil products (more taxes), and ship it (more taxes), and to store it (more taxes in county landowner taxes, business fees (taxes) and enviro fees such as disposal fees) and sales taxes of 5-9% on ANYTHING the company buys.

Now, when these "profits" are reported have the news media - or even the radio hosts quoting the oil company's so-called bottom-lines - giving any regard to the following:

"Profits" are taxed AGAIN at 40% as income.

Stock gains by the stockholders are taxed Again at 35% or 15%, depending on how the stockholder finally sells his or her dividends.

IRA/pension funds/and retirement accounts (that own much of the stock in America!) are taxed again when they get redeemed as the people retire.... Say 15%, maybe less.

THEN....

When the retirees die, and their estates are sold or distributed to the heirs of those who made the wise decision to buy stock instead of lottery tickets (since estates will included land (paid for and taxed already), houses (paid for and taxed already), and stock (paid for and taxed already) now worth xxxx thousands) is TAXED again at 45% by the death tax.

---

So, are these thousands of millions in EXTRA taxes included in the MSM and radio talk show numbers for the tax impact on oil prices? Are they reducing the oil company obscene "profits" by 45% for the extra income taxes owed to fed and state governments? Are they including the Social Security and Medicare taxes paid for out of that "operating expenses" category for refining oil? Are they including the state sales taxes on the employee's and company purchases? Are they including the local and state taxes: school taxes and sales tax on water and power and telephone and internet fees and 911 fees on every telephone line?

I've watched some of this sort of stuff before...and I don't see what the draw is. And it's so dumbed down. I certainly don't miss TV.

I've got a friend who lives in the NYC area. He (and his wife) watch it every morning. They've got a little TV in their kitchen so they can watch it as they have breakfast.

My friend is quite smart, but also quite liberal. Has been as long as I've known him, which is about 25 years. The only time I ever see those shows is when we are visiting him and his wife.

I agree with you. To me, they seem outrageously dumbed-down. They are everything I don't like. Superficial, obsessed with personalities, chasing every fad, every "it girl." They do have a certain feel to them; they are utterly predictable, safe little doses of pablum delivered in pre-measured containers. You start watching whenever you get up, and stop watching when it's time to go out the door. You're always guaranteed your fix.

They make you feel like you're part of something. Part of the hive. If beehives had television, it would look like Today. You get to "meet" the latest celebrity, the "in" chef you read about in last Sunday's New York Times Magazine, or whatever.

The formula has been exactly the same for 40 years. It's basically a forum for New York City's elite to enlighten the hoi polloi from the safety of a guarded television studio, with their public outside, visible through inch-and-a-half thick ballistic safety glass.

They make you feel like you're part of something.

That must be the key to those show's popularity. I guess if they attempted to discuss anything in detail they would lose their audience...or make them feel inferior. With so many topics, if you don't understand the background on the topic, you can't have a serious discussion about it...and I guess that works well enough for them. Perhaps it let's people feel they are informed although they are not.

And the celebrity worship goes totally over my head. Some people devote so much time to those people it is beyond belief.

I have been making a survey of magazines that are placed at the check-out counters of supermarkets. Time, Newsweek, US News & World Report have all been replaced by O, People, Cosmo, etc. Drudge, Russert, Blitzer may obsess over what is on the cover of this week's news mags, but the general public has no idea - no relationship at all with news beyond the Today show, the Tonight show, and other Late Night shows.

Recent man-on-the-street question and answer in Baltimore - where the Preakness will be run this Saturday: Q: How many races have to be won to win the Triple Crown? A: Ten?

I just record this to remind folks that these are the same people who respond to pollsters.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

If the price of gas had kept up with federal government spending for the last 30 years, gas would be at $8.00 a gallon!