ISSUES....
Inside,
confidential, off the record
New
oil tax coming
Grapevine
said, that the new windfall oil tax will be in effect next month
by Venezuelan goverment. Under the direct order of Hugo Chavez,
president of
Venezuea, all the goverment is to work under next month dead
line to implement the new tax. The tax will be enforce to all
venezuelan oil that is sold above USD $80 per barrel, and the
tax rate will be around 15%.
But
the most interesting development is that U.S. Democrats presidential
candidates are pushing for a similar tax in their elections campaings.
Johnson: Hillary, Barack and Hugo: Oh, my!
By Greg Johnson / Knoxville
News Sentinel
Sunday, February 24, 2008
Amidst
the red-hot rhetoric in the Democratic presidential primary,
Sen. Barack Obama and Sen. Hillary
Clinton are hurling populist pap that should send chills through concerned
capitalists and, if indicative of the true governing philosophy they would
bring to the Oval Office, could plunge the United States into an economic ice
age.
Both Democrats virtually ignore the inexorable advance of globalization
and promote an unrealistic economic isolationism. But their biggest
bogeyman is Corporate America. Clinton and Obama attack profitable
companies with an intensity not seen since socialist Hugo Chavez
waged class warfare to gain power in Venezuela a decade ago.
Clinton
released her "Economic Blueprint for the 21st Century" last
week that contained price controls and a confiscatory tax plan.
Clinton calls for a three-year freeze of interest rates on adjustable
rate sub-prime mortgages, free markets be damned. With the credit
markets already tight - lenders are more closely scrutinizing borrowers
and, therefore, making fewer loans - a freeze on mortgage rates
would further dampen lending to marginal borrowers and quite likely
cause other interest rates to escalate.
Clinton would also cap interest rates on credit cards - again
crimping the availability of credit for lower-income borrowers
- and would force drug companies to negotiate with Medicare, in
effect allowing the federal government to set drug prices. Her
desire to control free markets exposes her apparent bent to create
a strong central government and moves dangerously closer to a command
economy.
Clinton
proposes a windfall profits tax on large oil companies. Oil companies,
according to Clinton, are making too much money.
On this, she and Obama agree. In his victory speech after the Potomac
primary on Feb. 12, Obama said, "Exxon Mobil made $11 billion
this past quarter. They don't wanna give those profits up easily." The
crowd booed Exxon.
In
1998, CNN reported that a woman in the thrall of Chavez's victory
shouted, "Down with the oligarchy!" Chavez
had whipped the poor and uneducated into a righteous rage against
corporations.
Clinton, Obama and John Edwards - before he quit the campaign -
railed against corporate America in general and insurance, pharmaceutical
and energy companies in particular and constructed the same straw
men Chavez created.
While Clinton and Obama rant about the tax breaks Exxon Mobil
has received from the Bush administration, facts disprove the Democrats'
demagoguery. From 2002 through 2006, Exxon paid almost $85 billion
in income taxes. The world's largest oil company paid an average
effective tax rate of almost 39 percent over those five years.
To put Exxon's tax payments in perspective, in 2005 the oil giant
paid $23.3 billion in income taxes. That same year, almost 29 million
personal tax returns were filed that reported income of $25,000
or less. Those taxpayers - a natural Democratic constituency -
paid $19.5 billion in income taxes at an effective rate of less
than 11 percent. One oil company paid more taxes than all 29 million
lower-income filers. Now Obama and Clinton want to seize some of
that company's profits.
Chavez is seizing oil assets in Venezuela in an effort to build
a socialist state and threatened to take Exxon Mobil's assets.
Chavez also set price controls - sound familiar? - and now there
are periodic shortages of sugar, cooking oil, milk, beans, eggs
and chicken. Exxon Mobil fought back and won court orders that
froze Venezuelan assets to make sure the company was compensated
for its investment.
Oil closed at more than $100 per barrel last week for the first
time. Analysts blamed, in part, the South American socialist. Perhaps,
though, traders looked past the pablum of Clinton and Obama and
realized Chavez's economic school has a toehold in America. From
where the Democrats stand, it's a chillingly short step to the
slippery slope Venezuela is sliding down.
Greg Johnson is an East Tennessee native and resident and writes
this column for the News Sentinel. E-mail him at jgregjohnson@hotmail.com.
knoxnews.com
/ Sunday, February 24, 2008
© 2008,
Knoxville News Sentinel Co.
Petroleumworld
News 02/25/08
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