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The Dumbest Tax Policy You Could Possibly Support

Jul 1st, 2008 | By Steve Sjuggerud | Category: Stock Market Investing

Oil is skyrocketing… and Chevron (NYSE: CVX) and Exxon (NYSE: XOM) should be making outrageous profit margins. So let’s tax those “windfall” profits! But… hold on a minute…

From March 2007 to March 2008, Exxon’s profit margin was just 10%. Meanwhile, its income tax rate was about 43%.

Compare this with Microsoft: Microsoft’s (NASDAQ: MSFT) profit margin was over 28%. And Microsoft’s tax rate was under 30%.

Exxon

Microsoft

2007 Profit Margin

10%

28%

2007 Tax Rate

42%

30%

Microsoft makes a much bigger profit margin than Exxon. And it’s taxed way less. Heck, if anyone deserves an “excess profits tax,” it’s Microsoft, not Exxon, right?

Do you think Microsoft’s Office software is outrageously expensive? And if so, is the right solution to tax Microsoft more? Does that fix the problem for consumers?

Right now, people just want to hear that the government is doing something to fix high gas prices. Many people naively believe the gas stations and Big Oil companies like Exxon are gouging them.

But calling for a windfall tax on Big Oil is among the dumbest policies you can possibly support… and there are a lot of dumb ones to consider.

Steve Sjuggerud

Source: The Dumbest Tax Policy You Could Possibly Support


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By Steve Sjuggerud

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About the Author

Steve SjuggerudDr. Steve Sjuggerud runs his own investment advisory services called True Wealth and DailyWealth. True Wealth is one of the fastest-growing investment newsletters in the country, with more than 60,000 subscribers worldwide. DailyWealth is a free and, as you might have guessed, daily advisory service in the spirit of "Buy Low, Sell High." Steve received his Ph.D. in International Finance and has the "real world" experience that comes from having been vice president of a $50 million global mutual fund as well as an analyst, broker, offshore hedge fund manager and diligent world traveler.

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The DailyWealth mission is to show you how to avoid risky investment, and how to avoid what the average investor is doing. We believe that you can make a lot of money and do it safely by simply doing the opposite of what is most popular.

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