"WINDFALL" PROFITS TAX ON FRONT BURNER AGAIN

ExxonMobil's announcement of $10.71 billion in profit for the fourth quarter of 2005—the highest quarterly profits of any company in history—and over $36 billion for the year has Capitol Hill hopping. Calls are again being heard for a so-called "windfall" profits tax, as if taxes aren't already high enough. Indeed, with an estimated 38 percent effective tax, Exxon's fourth quarter profits didn't even cover the full 2005 tax bill. Combined for 2005, Exxon, ConocoPhillips and Chevron paid over $44 billion in corporate income taxes. The Senate has now passed provisions reducing tax-credit options for oil companies, including barring a credit for taxes paid in other countries. The measures are not certain in the House—here's hoping they fail.

Deregulation and lower taxes are perhaps counter-intuitive, but they are the answer. Exxon increased fourth-quarter capital and exploration by $5.3 billion from a year earlier, or about the same percentage as profits. Increased taxes would hinder capital expansion and exploration. Greater oil consumption in China and India, as well as political uncertainty in Iran and Iraq, are driving the price of oil higher. No tax will change that. Rather, it would be you, fellow Patriots, who end up paying the tax at the pump, if there's anything left to pump.

SOURCE: FEDPAT