Biden muffs it again! Biden wants to tax excess profits on oil companies like Shell and Exxon which made YUGE profits as a direct result of Biden shutting down manufacturing in the US.   Shell is a UK Company headquartered in the Hague. Tax schemes for oil companies are complicated.   Of the $20 billion Shell paid to governments in 2021, 5% went to the US – which ‘includes’ excise and sales taxes charged by the US government on every gallon of gas – a Windfall would simply make them move production elsewhere.    

In addition, each year these oil companies receive $12 to $19 billion dollars in tax subsidies from the federal government, ranging from the tax exemption on Foreign Oil and Gas Extraction Income (FOGEI) to the Last-In, First-Out (LIFO) accounting method.

Shell Oils Balance Sheet as of 2021, was decent, they paid off some debt, but the vast majority of its assets are in Property Plant & Equipment.   Expansion is limited and an additional tax will simply increase the cost to consumers as ALL taxes are passed along.

While The WH Handlers have yet to determine how this ‘excess profit’ tax would be implemented and whether it is legal on foreign companies it could actually have catastrophic effects.   As in, the oil companies currently doing business in the US – will sell elsewhere and possibly even more headquarters.

Biden’s Windfall plan is telling the oil companies that they should NOT reward shareholders with profits – but should act like a nationalized corporation wherein profits are determined by the government…   If it sounds socialist/communist that’s because it is!  Of the six oil giants mentioned by Biden only 3 were actually headquartered in the US.   While Windfall taxes have been assessed before because of war, it is the Russia Sanctions imposed by the Biden Administration, not the war, that has created a shortage.

The means to end the shortage require the US government to discontinue punitive actions against US oil companies and against Russian Sanctions.   Still, any Windfall would necessitate a Congressional vote which is likely to fail.

Before exiting stage left, Boris Johnson levied a Windfall Tax on oil companies to be used to fund the UK cost of living crisis. The tax can only be levied on profits made in the country levying the tax. In the UK that tax is 25%.   The end result is BP will pay $800 million more this year, and Shell $0 because they had no UK profits.  FAIL!  $800 million will give UK citizens $11.90 each…

The Center for American Progress, an Obama/Podesta liberal advocacy organization is behind the Windfall Tax Agenda.   They advocate a tax based on ‘book profits’ which would eliminate tax benefits such as depreciation and amortization on investments. Deterring investment in new refineries and equipment would make American companies unable to compete.  Shoring production and eliminating jobs would be the result.

According to The Tax Policy Center, a voice for the Urban and Brookings Institute, the purpose of the tax is simply to increase revenue to ‘the government’.   NOTHING is said about the tax lowering the cost of oil at the pump under ANY scheme! They note that investors or shareholders would take the brunt of the hit.

In conclusion, the Tax Policy Center notes that the best way for the US government to still benefit without discouraging production (which would increase pump costs) and discourage expansion (which would result in manufacturing stalls), they recommend imposing a permanent rent tax and eliminating existing tax breaks.  Again it does nothing but INCREASE Pump costs as the rent cost would be added to the price of the gas.

The ONLY way to bring down prices for consumers is supply – meaning opening the US to full capacity as it was during the President Trump administration.