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windfall tax
Flush With Record Profits, Exxon Sues to Block EU Windfall Tax
Exxon posted a staggering $19.7 billion in profits in the third quarter of 2022 as consumers continued to face high energy costs.
Dec 28, 2022
Fresh off posting the highest quarterly profit in its history, the U.S.-based fossil fuel giant ExxonMobil sued the European Union on Wednesday in an attempt to stop the bloc from imposing its recently approved windfall tax targeting major oil and gas companies.
The Financial Times, which first reported the new lawsuit, noted that the challenge takes aim at the European Council's "legal authority to impose the new tax—a power historically reserved for sovereign countries—and its use of emergency powers to secure member states' approval for the measure."
"The new tax is due to take effect from December 31 and will apply a levy of at least 33% on any taxable profits in 2022-23 that are 20% or more above average profits between 2018 and 2021," the newspaper explained.
In a statement, Exxon spokesperson Casey Norton insisted the company recognizes that sky-high energy costs are "weighing heavily on families and businesses" but claimed the tax would "undermine investor confidence, discourage investment, and increase reliance on imported energy."
Reutersreported Wednesday that Exxon's chief financial officer has estimated the E.U.'s windfall tax could cost the corporation around $2 billion through the end of next year—a fraction of the company's 2022 profits.
Approved in late September amid a mounting cost-of-living crisis across Europe, the windfall tax was presented as an effort to generate additional revenue to "provide financial support to households and companies" struggling with high energy costs. Oil and gas companies like Exxon have been accused of exploiting global energy market chaos spurred by Russia's war on Ukraine to hike prices and pad their bottom lines.
In late October, Exxon announced it brought in $19.7 billion in profits from July to September, its largest-ever quarterly haul. The company also announced it would raise its dividend and expand its share buyback program, rewarding wealthy investors as consumers continue to face elevated prices at the pump.
According to a recent filing, Exxon has also been rewarding its top executives, boosting the annual salary of CEO Darren Woods from $1.70 million to $1.88 million for the coming year.
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Yes, Windfall Taxes on Big Oil Are Warranted--But That's Not All
While windfall taxes are undoubtedly justified, their efficacy is suspect.
Sep 22, 2022
Windfall taxes are utterly defensible as levies on unexpected pure rents that recipients did nothing to deserve and that they receive only by virtue of enjoying a position of market power within an economy. The usual criticisms of taxation as market-distorting, price-signal-jamming, investment-deterring state intervention do not hold. No one can argue convincingly against a windfall tax being imposed on an electricity-generating company that uses solar, wind, or hydro power, but suddenly is flooded with cash because the price of natural gas has skyrocketed.
But while windfall taxes are undoubtedly justified, their efficacy is suspect. We know that electricity companies belong to multinational corporations skilled in the dark arts of obscuring their profits through complex intra-organizational (fake) trades. We also know that, unwilling to be content with profits from electricity, they indulge themselves in derivative trades that can wipe out--or seem to wipe out--much of their windfall profits during times like this.
For these reasons, windfall taxes are necessary but insufficient. Governments should aim to prevent the windfall profits from reaching these companies in the first place, by imposing wholesale price caps on non-gas-using electricity producers, which reflect their average cost plus a reasonable net return.
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82% of US Voters Believe Inflation Is Fueled by Corporations 'Jacking Up Prices'
New survey data shows that voters "want elected officials to challenge corporate greed to lower prices," said one advocate.
Mar 12, 2022
On the heels of fresh data showing that the U.S. inflation rate jumped to a new 40-year high last month, a new survey found that more than 80% of American voters believe costs are rising in part because "big corporations are jacking up prices" while raking in record profits.
Released Friday by the advocacy group Fight Corporate Monopolies, the poll showed that 82% of registered U.S. voters blame big companies for at least some of the recent inflation spike and want elected officials to "take on powerful CEOs and rein in corporate greed to lower prices."
"Rising prices is the top economic issue for most voters, and they want elected officials to challenge corporate greed to lower prices," Helen Brosnan, executive director of Fight Corporate Monopolies, said in a statement. "Political leaders should directly address rising prices, release plans to combat corporate greed's role in driving prices higher, and put forth arguments that center CEOs and big corporations."
\u201cNEW: Following yesterday's inflation report, new polling shows messaging linking corporate greed to rising prices is highly effective.\u201d— Fight Corporate Monopolies (@Fight Corporate Monopolies) 1647008604
The new survey, based on a sample size of 1,000 respondents, comes as progressives in Congress continue spotlighting corporate price-gouging as a key culprit behind rising prices nationwide even as the White House abandons that narrative, despite data indicating it resonates with voters.
With gas prices surging amid Russia's onslaught against Ukraine, Democrats in the House and Senate introduced legislation on Thursday that would impose a "windfall tax" on oil companies in an effort to "curb profiteering."
"Last year, oil and gas companies made $174 billion in profits," Sen. Bernie Sanders (I-Vt.), a co-sponsor of the legislation, wrote in a Twitter post. "This year they're on track to make more. We cannot allow Big Oil to use Ukraine and 'inflation' as an excuse to rip off Americans."
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