Wednesday, October 26, 2005

PRESS RELEASE -- Who is gouging whom?

Posted by Craig Westover | 5:59 PM |  

Interesting . . . .
Tax Foundation News Release

For immediate release
Contact: Bill Ahern (202) 464-5101

State and Federal Tax Collectors "Profit" More from Gasoline Sales than U.S. Oil Industry, Says New Analysis

Washington, D.C., October 26, 2005 — With Members of Congress calling for new “windfall profits” taxes in response to high gas prices, the Tax Foundation has released a new analysis showing state and local treasuries have collected more gas taxes in recent decades than all major U.S. oil companies’ profits combined.

“Over the last two decades, gas tax revenues have far outstripped the domestic profits of the largest U.S. oil companies,” said Tax Foundation President Scott A. Hodge. “While oil industry profits are highly volatile from year to year, gas tax collections are not, and are currently near historic highs.”

Several bills have been introduced in Congress, including the Windfall Profits Rebate Act of 2005 (S. 1631); the Gas Price Spike Act of 2005 (H.R. 2070); the Consumer Reasonable Energy Price Protection Act of 2005 (H.R. 3664); the Gas Price Relief Act of 2005 (H.R. 3752); and the Recapture Excess Profits and Invest in Relief (REPAIR) Act of 2005 (H.R. 1809).

The new analysis shows that in recent decades, state and federal governments have “profited” far more from the oil industry than companies have, raising up to seven times as much in gas taxes in some years as the largest U.S. oil companies have collectively earned in domestic profits.

“Governments have collected $1.34 trillion in gas taxes since 1977,” said Tax Foundation Staff Economist Jonathan Williams. “That’s more than twice the profits of major U.S. oil companies during the same period.”

Profits of U.S. oil companies have been highly volatile in recent decades. Between 1977 and 1985, oil industry profits averaged $33 billion per year. But between 1986 and 1995 they averaged just $12.3 billion. In the last decade, profits have ranged from $9 billion to $42 billion per year.

“As lawmakers respond to rising gas prices, they should keep in mind that state and federal gasoline taxes fund road construction. For that reason, they enjoy broad support as justifiable taxes, support that they would lose if the tax were raised as part of some other social or economic policy,” said Hodge.

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

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Category: Tax Policy