Obama ditches widfall profits tax on the oil companys

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Originally Posted by K G

The pain that the Big 3 (and other) automakers are going through is going to work out in the long run IF they truly commit to making more fuel efficient cars. If we USE less, we'll cut OPEC's extorted profits naturally by using less of their product. They won't be able to artificially raise the prices in the world economy if demand for the product shrinks.

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Personally, I think that if the Big 3 want a bail-out, that they should get it from the oil companies. After all, Detroits' gas guzzlers are a huge factor in the oil industry's record breaking profits over the past couple of years. Their profits in the first 6 months of this year are more than what the Big 3 are currently asking Congress for.

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Originally Posted by backpasture

At $80/barrel, the 'windfall' that oil companies were getting at $150/barrel is gone. Hard to have a 'windfall tax' without a 'windfall'.

Heaven forbid you might be inclined to understand what 'windfall' means.

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Always interesting having a conversation with someone that thinks they are the smartest person in the room.
Frankly I don't know why the rest of us bother to post.
With your stellar grasp of the issues, the ability to differentiate between gross and net income and the Wickipedia definition of windfall profits I, for one, am duly impressed.

Mac

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Originally Posted by saltmarsh

With your stellar grasp of the issues, the ability to differentiate between gross and net income and the Wickipedia definition of windfall profits I, for one, am duly impressed.

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You shouldn't be surprised that your snide post elicited a snide response.

I agree that 'gross vs net' is pretty remedial stuff. I only spelled it out because Legacy 6 obviously didn't understand it (and specifically asked for the definition of a 'windfall profit'.)

/Now back to our regularly scheduled sniping.

So backpasture why don't you just post your list off stupid people. We can all get our droll cups sit in the corner and read your words of wisdom. Or we could just turn RTF into your blog. That would be fun for all.

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Originally Posted by Legacy 6

Still doesn't tell me what a windfall profit is.

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And the Wickipedia definition will not nessecarily tell you either. The argument can be made that these profits were not necessarily unforseen and certainly, at least as it applies to the oil companies presently, not due to government regulation. The problem is, quite often and depending on the political party in power, that windfall profits are a moving target and always arbitrary.

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Originally Posted by Legacy 6

I still think you don't understand that if the government places a tax on a company, that company has to figure that into their overhead costs... I don't have to "quote" (since you didn't) these huge lofty "accounting principles" to understand that the more my business is taxed, the more I have to charge to my customers.

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You can only pass your costs to your customer 100% in an environment where you have no competition from others who provide the same product or service that you do.

The profit is based on a % of invested money. I have a small construction business. But the way I figure my bids and profit is this. Exp. Say I have a 400 sheet drywall job. Not figuring any taping or framing. I order the sheetrock for .32 cents a foot or $6145 add 15% or $920 for supplying and looking at prints. Labor cost me about $50 an hour per guy. I charge $65. Any changes to these costs I raise my price accordingly. But my markup on materials is still 15%. It's not a windfall. An increase in materials cost means I'm risking more of my money to get the job done. I also add a markup if I"ve had prior dealings with the person and they were a pain in the ass, or tried to nickle and dime me.

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Originally Posted by backpasture

You don't understand that 'overhead costs' are before Net Profit. There are NO overhead costs on Net Profit. Net Profit is the amount of money you have left over after you pay all of your 'overhead costs'.

This stuff isn't rocket science, it's Accounting 101.

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Okay, now that we have that out of the way, condescending much? So now that you have that "net profit" and you spend your net profit on materials and equipment, where you have to pay more taxes, and use the net profit to increase the pay or give bonuses to employees or even (GASP!) yourself (since it's your fricken' business) when they and you have to pay taxes on those as well...

I don't have to go further do I? Accounting 101 doesn't usually see the 2nd and 3rd order effects of taxes.

It's cold in here regards

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Originally Posted by Legacy 6

Okay, now that we have that out of the way, condescending much? So now that you have that "net profit" and you spend your net profit on materials and equipment, where you have to pay more taxes, and use the net profit to increase the pay or give bonuses to employees or even (GASP!) yourself (since it's your fricken' business) when they and you have to pay taxes on those as well...

I don't have to go further do I? Accounting 101 doesn't usually see the 2nd and 3rd order effects of taxes.

It's cold in here regards

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Legacy 6, I hate to have to agree with Backpasture but you ARE getting your terms messed up.

Gross Income.....money coming in. So you sell gas for $1.00 a gallon. That would be gross income. It costs you .10 gallon to buy it, .10 gallon to refine it, labor costs are .10 gallon. So the $1 minus the .30 would be .70. You then pay taxes ON the now its called Gross Profit. After you pay your taxes on that amount (gross profit) then you end up with Net Profit. Net profit is the amount you actually MAKE. So there are no more costs coming out of Net Profit. However, you (as a business owner) would not be doing a very good job if you did not keep track of your Gross Profit. Most companies have a certain percentage that they like to hit. Too high of a Gross Profit is price gouging (and may price yourself out of the market) and too low and you will go out of business. Gross Profit, THAT is where you make adjustments and then add to the price (might have to bump it up to $1.10 gal if tax rate jumps from say 20% to 30%). that is where the costs get passed on.

(please please accountants, this is the cliff note version, and very simplified. don't jump all over me)

WRL

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Originally Posted by Legacy 6

So now that you have that "net profit" and you spend your net profit on materials and equipment, where you have to pay more taxes, and use the net profit to increase the pay or give bonuses to employees...

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Wrong again. You don't spend your 'net profit' on materials and equipment, or employee compensation. 'Net Profit' includes what is left over AFTER you have paid all of that stuff.

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Originally Posted by Legacy 6

I don't have to go further do I?

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No, you don't (but I'm sure you will). You've already demonstrated that your basic premise ("You're going to take money from the oil company, in order to give it to the consumer, so they can give it back to the oil company...??") is based upon your complete misunderstanding of basic accounting principles.