tag:blogger.com,1999:blog-2342100421756914597.post3834609626170119192..comments2024-01-12T18:45:52.043-05:00Comments on The Weekly Sift: Getting RicherDoug Muderhttp://www.blogger.com/profile/04666144843949850394noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-2342100421756914597.post-29704695335979151882011-04-25T13:26:36.482-04:002011-04-25T13:26:36.482-04:00I see that I did Colin an injustice: his link does...I see that I did Colin an injustice: his link does go to the quote if you read on to page 2.<br /><br />I have no reason to believe the administration will find an illegal market manipulation, but I think such things are possible if enough of the majors conspire. I wasn't including that possibility in my analysis because I was assuming legal behavior.Doug Muderhttps://www.blogger.com/profile/04666144843949850394noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-57957189570002546402011-04-25T12:02:46.061-04:002011-04-25T12:02:46.061-04:00The link doesn't go to that quote any more. Bu...The link doesn't go to that quote any more. But markets can be manipulated. Enron showed that. I'm not sure what the connection is.Doug Muderhttps://www.blogger.com/profile/04666144843949850394noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-9215922294394766042011-04-23T16:10:04.004-04:002011-04-23T16:10:04.004-04:00So, given this discussion, what do you think of th...So, given this discussion, what do you think of this?<br /><br />"Meantime, Obama has ordered his Justice Department to form a task force to look for fraud or manipulation in the oil markets. "<br /><br />http://www.boston.com/news/nation/articles/2011/04/23/obama_knows_political_fortunes_tied_to_gas_prices/?p1=News_linksColinhttps://www.blogger.com/profile/16028405920124504194noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-91003105463121027742011-04-20T11:15:41.314-04:002011-04-20T11:15:41.314-04:00OK, I think I see what's going on: We're t...OK, I think I see what's going on: We're talking about different calculations.<br /><br />I'm starting with the context of Rep. Posey's comment, where the oil company looks at the tax, figures out what it needs to charge to cover the tax without hurting its profit, and maybe tacks on a little more.<br /><br />I'm saying it doesn't work that way: Exxon's pump price is still going to be determined by what the independent down the street and the Shell by the highway are charging. As I imagine the what-do-I-charge-today calculation, there's no place in it for the tax to have an effect.<br /><br />But if, say, I'm modeling the situation as an outside economist, I might track some indirect effects of the tax that in the long run do come around to affect the pump price. (Maybe the guy who owns the independent decides this is a good time to retire. Or maybe it's no longer worthwhile to drill in some risky place.)<br /><br />But while I'm aware of those possible effects, I want to avoid the kind of just-so-story thinking that I often see in places like the editorial page of the Wall Street Journal, where if we can imagine such an effect, we can go ahead to assume that it necessarily dominates.<br /><br />So, to sum up: The kind of calculation Rep. Posey imagines isn't what's happening. If there's another calculation that comes to the same result, I want a chance to look at it and kick the tires.Doug Muderhttps://www.blogger.com/profile/04666144843949850394noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-21563064062938763662011-04-20T08:14:23.925-04:002011-04-20T08:14:23.925-04:00Doug, I agree with your last comment, though we ca...Doug, I agree with your last comment, though we can argue how big the second order impacts are....but you originally said this:<br /><br />"subtracting an income tax from their maximized profit doesn't change the calculation".<br /><br />My original point: it does change the calculation even if they CAN'T charge more due to the market. At a minimum it will lead to more "tax avoidance" in future years.Colinhttps://www.blogger.com/profile/16028405920124504194noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-91255776866704901532011-04-20T07:32:39.368-04:002011-04-20T07:32:39.368-04:00There's got to be a choice between "treat...There's got to be a choice between "treat as independent variables" and the position that income tax can be passed on penny-for-penny as Rep. Posey claimed. There undoubtedly are second-order effects by which a corporate income tax would effect the workings of the market. But the primary effect is that government revenue goes up and corporate profit goes down.Doug Muderhttps://www.blogger.com/profile/04666144843949850394noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-39783315927552655122011-04-19T22:09:17.746-04:002011-04-19T22:09:17.746-04:00"It's not a given that taxing profits wou..."It's not a given that taxing profits would reduce any of these, or could be immediately passed on to customers."<br /><br />I firmly believe one can not treat these as independent variables. If nothing else, many corporate officers have compensation packages that are linked to profits....<br /><br />Good article on corporate "profit" here: http://www.fool.com/investing/general/2007/09/05/foolish-fundamentals-the-income-statement.aspxColinhttps://www.blogger.com/profile/16028405920124504194noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-64201647745264373252011-04-18T22:52:37.336-04:002011-04-18T22:52:37.336-04:00This comment has been removed by the author.Unknownhttps://www.blogger.com/profile/17624306777383197269noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-28223397223322154672011-04-18T22:38:27.533-04:002011-04-18T22:38:27.533-04:00It's my understanding that corporations only p...It's my understanding that corporations only pay tax on their profits, which is the money left after deducting for such things drilling expenses, safety equipment, research, salaries, bonuses, etc. It's not a given that taxing profits would reduce any of these, or could be immediately passed on to customers. <br /><br />Perhaps you're thinking of taxing the raw materials that companies use, which is a different matter. That cost could be passed on to consumers if it impacted all companies in the market and raised their costs equally.Mike Ignatowskihttps://www.blogger.com/profile/10811441284298208768noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-81107697689548559662011-04-18T22:27:38.362-04:002011-04-18T22:27:38.362-04:00The CBPP's analysis of Obama's budget plan...The CBPP's analysis of Obama's budget plan is a good place to start.<br /><br />http://www.cbpp.org/cms/index.cfm?fa=view&id=3469Fakehttps://www.blogger.com/profile/07047958636445283255noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-11848817987231698772011-04-18T19:17:56.691-04:002011-04-18T19:17:56.691-04:00They would "make" less money, their stoc...They would "make" less money, their stock would be worth less, pay less dividends, less money for research and bonuses, may be pressure to increase earnings by cutting costs, etc, are some possible outcomes.<br /><br />http://finance.yahoo.com/q/ks?s=xom<br /><br />52-Week Change3: 24.08%<br />S&P500 52-Week Change3: 10.70%Colinhttps://www.blogger.com/profile/16028405920124504194noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-61015157088173125122011-04-18T17:07:36.305-04:002011-04-18T17:07:36.305-04:00Exactly. And what would change if Exxon paid incom...Exactly. And what would change if Exxon paid income tax?Doug Muderhttps://www.blogger.com/profile/04666144843949850394noreply@blogger.comtag:blogger.com,1999:blog-2342100421756914597.post-72336264988219937202011-04-18T14:20:06.631-04:002011-04-18T14:20:06.631-04:00"Then someone needs to explain this: Why isn&..."Then someone needs to explain this: Why isn't Exxon already charging the higher price?"<br /><br />Because of the other oil companies. Its called competition. :-)<br /><br />Have you ever noticed which station has the cheapest gas in town? It is not any of the majors....Colinhttps://www.blogger.com/profile/16028405920124504194noreply@blogger.com