I addressed this above, briefly.
The answer, I think, is that additional income taxes the US govt gets from XOM are offset by lost income tax that the US govt does not get from the buyers of XOM's gasoline.
Here is how it works.
1. Every additional $1 that XOM gets for selling a gallon of gas, is an additional $1 that the buyer has to spend on that gallon.
2. If the buyer is a business, then that additional $1 reduces its profit (think truckers, airlines, construction companies, anyone who uses gasoline or transportation in their business - they are all hurting now). Lower profit for the buyer means lower income tax that the buyer pays the US govt.
3. If the buyer is a consumer, that additional $1 spent on gasoline is $1 he doesn't spend at retailers, restaurants, and other businesses that sell clothes, food, home remodeling, Porsche parts, etc (high gas prices are one reason why US retail sales are so bad right now). The lower revenue for those businesses means lower profits and thus lower income taxes that those businesses pay the US govt.
Make sense? The extra $1 that XOM gets for its gasoline doesn't come from nowhere - it gets drained from another part of the US economy. $1 in XOM's pocket is $1 out of someone else's pocket, and the additional profit made by and taxes paid by XOM is offset by profit not made and taxes not paid by someone else.
By the way, don't think that XOM's income taxes all go to the US govt. Actually very little of it does. In 2007 XOM reported $29.8BN of income tax on $70.5BN of pretax income - but only $5.1BN of that income tax was paid to the US federal and state govts, the other $24.7BN of income tax was paid to foreign governments.
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Originally Posted by Rsquared
What about income taxes? That will get the govt above 70% of oil co profits and the govt doesn't have to do all that messy drilling and stuff.
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