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Some of the leading Democrats are calling for an excess profits tax on oil companies while not disclosing the fact that the income tax burden of these companies is already the highest among U.S. companies. ExxonMobil's worldwide income tax rate for 2007 was 44 percent, and for the first half of 2008 it was 49 percent. The average 2007 income tax rate for 80 leading U.S. companies was only 30 percent.
While proposing the excess profits tax, the same politicians oppose drilling offshore and in ANWR, which would produce oil royalties of 37 percent of the price of oil based on the agreement between the federal and state governments to allow drilling in the Gulf of Mexico.
Using the low price of $100 per barrel, the National Taxpayers Union estimated the oil royalties from extended offshore and ANWR drilling at $131 billion per year, or $4 trillion over 30 years to be divided equally between the states and the federal government.
This revenue would far exceed any excess profits tax and should satisfy those who falsely blame the oil companies for the higher gasoline prices and want to "punish" them in some way.
Adding to our domestic production would reduce our dependence on imported oil, now 70 percent of our consumption. It would help reduce our trade imbalance and shore up the value of the dollar. More importantly, reducing our dependence on imported oil is a national security issue that should override any opposition to drilling where there is oil.
Gene Jacobs, Pinewild
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