By John Eidson
Barack Obama and John McCain both favor hitting Big Oil with a stiff windfall profits tax. Their implied logic is based on the (false) premise that greedy oil industry executives are the primary recipients of misbegotten record profits.
The after-tax profits of any corporation belong to its stockholders. So how much oil company stock do oil company executives own? According to a report by Robert J. Shapiro, former president Bill Clinton’s Undersecretary of Commerce for Economic Affairs, the answer is a meager 1.5%.
Here’s what Shapiro’s report has to say about the demographic makeup of the 98.5% of oil company stockholders who are not oil industry executives: “The data show that ownership of oil industry shares is broadly middle class.” More specifically, Shapiro found that:
- 43% of oil industry shares are held in the mutual fund accounts of 55 million
- 27% are owned by more than 2,600 federal, state and local pension funds, funds that represent the retirement security of middle class worker categories ranging from veterans, policemen and firemen to teachers, air traffic controllers and sanitation workers.
- 14% are held in the IRA and other personal investment accounts of 45 million households.
In short, the overwhelming lion's share of oil industry profits go to ordinary Americans, not oil industry fat cats.
Here’s something else you won’t hear from McCain or Obama. Oil industry profit margins -- the amount earned per dollar of sales – is roughly the same as it has been for decades, and is in line with profit margins of other
The rapid rise of the price of a barrel of oil is largely responsible for $4 a gallon gasoline. Knowing that most voters are almost totally uninformed about the economics of oil industry profits, the country’s presidential candidates are being shamelessly dishonest about an important issue that affects us all.
John Eidson is a white conservative who takes great delight in black success.
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