May 23, 2008

CERTAINLY NOT ENOUGH MORE:

Q: Does the government really make more in taxes from the sale of a gallon of gasoline than the oil companies do? (FactCheck.org)

A: Possibly. Both taxes and profits account for a large share, but which is larger depends on too many unknown factors to allow for a clear answer.

Let’s start with the basics. According to the Energy Information Administration, in February 2008 state and federal excise taxes accounted for 13 percent of the average price per gallon of regular gasoline sold in the U.S.

That figures to just under 40 cents per gallon as a national average. However, the actual amount paid varies greatly by state. Federal taxes are a flat 18.4 cents per gallon of regular gasoline, no matter the price at the pump. State taxes range anywhere from 7.5 cents to 34 cents per gallon, according to the Federal Highway Administration.

Posted by Orrin Judd at May 23, 2008 10:53 AM
Comments

On closer examination, however, that 8.3 percent earnings figure turns out to be after-tax income. The pre-tax profit margin would be considerably higher.

How can income taxes not be important when comparing taxes to profit? The numbers in the article show that overall taxes paid are higher than profit, so they began splitting hairs to even things out.

Over the last two years the business I run earned over $1,000,000 in before tax profit but about $50,000 in after tax profit. Democrats see the $1million and think we're getting rich. I see the $50,000 and wonder if we'll survive another year.

Posted by: Patrick H at May 23, 2008 1:32 PM
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