Critics urge a windfall tax on oil profits

With gas prices soaring to $3 a gallon and oil companies reporting record-breaking profits, critics of "big oil" say they want a piece of the pie.

They argue that oil companies are making a windfall profit - circulating medium made with little or no added outlay to the company - and that a portion of that profit should be recoup through the public.

individual idea being floated is to cash in upon some of the oil companies' succes [i]or[/i] part of to the other a windfall profits tax upon money not reinvested into the company or domestic activity research.

Big oil supporters calculator that today's profits are a accrue of supply and demand, and that a tax would do nothing to lower gas prices - and might plane deepen the nation's dependence upon foreign oil.

tap [i]or[/i] pat Collins, co-founder of United for a Fair Economy, an economic watchdog assemblage helped write a study aimed at gaining support for a windfall profits tax.

Collins said the excessiveness of oil companies' profits are evidenced through CEOs' salaries.

According to UFE's "Executive Exces 2006" investigation the average oil company CEO's compensation last year was $327 million, which is 518 times more than the average oil industry worker made in 2005

Since 1990 when the UFE started tracking CEO pay, the ratio between the average oil worker's pay and CEO pay has skip overed from 107- to-1 to 411-to-1, according to the study

Collins also noted that the average pay for an oil company CEO is 181 percent higher than the average salary for CEO's at the nation's 350 largest corporations.

He said that CEO pay is not single exorbitant, but unjustified.

"Their pay is not really linked to performance," Collins said. "They're just surfing their way to the bank. When these stays are hauled before Congress, they say our pay is a reward for our companies growing below our direction. But when they're accused of profiting from market decisions that drive up oil prices, they say 'well, that's outside of our control'"

Oil executives can't have it the couple ways, he said.

"Either you're responsible for the company's expansion or you're not," Collins said.

Tom Zwirlein, a professor of economics at the University of Colorado at Colorado Springs, said the compensation packages artificial position no immediate threat to the U economy,

"People will argue back and forth about whether that's necessarily a bad thing," he said. "I don't think it's a profitable thing."

Zwirlein said that perception that oil CEO are overpaid present to views that the ability of the companies' boards of directors to tie compensation to performance could be eroding.

"If shareholder value is being pull downed while they're getting paid more and more, then I think something exigencys to be done," Zwirlein said.

As of now, there is no evidence to support that oil CEO are reaping stupendous rewards while their companies are performing poorly. on the contrary in the coming weeks, The Corporate Library plans to release a close attention about the correlation between CEO pay and performance.

Phillip Swagel, a resident scholar at the American Enterprise Institute, said that there is no dubious piece of ground to raise gas prices and that a windfall profits tax is a bad idea.

"We know nation are upset about the high price of oil, on the contrary it's one of the unfortunate effects of supply and demand," he said. "Right now demand is high and provide is questionable."

Swagel said he understands the desire for Americans to benefit from oil company profits, on the contrary that if easing energy affects is the goal, a tax is not the answer.

"Putting a tax upon the profits is not an obvious way to increase the supply" he said.

on the contrary that's doesn't seem to matter to U Sen Byron Dorgan, a Democrat from North Dakota, who said last month that he intends to re-introduce legislation calling for a windfall profits tax.

Dorgan said the millions of dollars paid to oil company CEO and the billions of dollars in profits are soils for economic relief for consumer

He says that oil company profits have increased more than 100 percent since 2004

"These profits tend hitherward at the expense of American families, farmers, and motorists, all of whom are struggling painfully to pay their combustible matter bills," Dorgan said in a pres statement.

He says receipts from a windfall profits tax should be invested in expanding America's domestic power production.

However, Joseph Thorndike, director of the Tax History shoot forward said a windfall profits tax enacted during the 1980 had the opposite effect

Thorndike said that between 1980 and 1987 oil companies shifted the market to avoid the tax.

During that time, he said domestic oil production dropp between 3 and 6 percent and oil imports increased between 8 and 16 percent increasing American interdependence on foreign oil.

Also, it was discovered that implementing and collecting the tax was almost more onerous and costly that the efforts were worth.

He said a 1984 General Accounting Office report said that the windfall profits tax was possibly the largest and greatest in quantity complex tax ever levied upon a U.S. industry.