Opinion

PELOSI’S POISON TAX PUSH

After passing the first major federal tax hike in 12 years, House Democratic leaders were quick to assure voters that the $14 billion-plus in higher taxes would be borne solely by “Big Oil.”

If only.

Since the global energy market sent crude prices skyward three years back – eventually topping off around $80 a barrel – Democrats have made no secret of their lust for a greater governmental take from spiking oil revenues. Pitches for “windfall” profits taxes are issued as regularly as quarterly earnings reports.

Now, though, with oil prices nose-diving, trading just under $50 a barrel Thursday, companies will be hard-pressed for repeat performances in ’07.

No matter.

Just last week, Speaker Nancy Pelosi told a San Francisco crowd of her plans for a greater slice of the profits, which she labeled “obscene.”

But in the Democrats’ haste to drill new holes into petroleum-industry bank accounts, the question of just who actually benefits from “Big Oil” profits has been neglected.

It’s not just fat-cat oil barons, but teachers, cops, firemen and other civil servants – voters Democrats generally purport to look out for.

How so?

According to Dave Gardner, a media spokesman for ExxonMobil, “Approximately 40 percent of shares are directly held by individuals. The remainder is held by institutions – generally, retirement plans and mutual funds for people from all walks of life, including pension plans of teachers, civic employees, etc.”

“Virtually every state employee pension in the U.S. has investments in ExxonMobil,” he said.

Meaning the retirements of teachers, cops and much else of the Democrats’ bread-and-butter voting base are linked to the performance of “Big Oil.”

In dividends alone – that is, discounting the growing value of assets owned – shareholders received $180 billion from the industry from 2000-2005.

This presents an enormous challenge to pension systems invested heavily in oil and gas. Take California. As of 2004, its state and local pension systems had $9.8 billion invested directly in oil and gas assets.

Overall, California’s systems have $340 billion invested in general equities – including mutual and index funds that hold oil and gas stocks.

In New York, the situation is similar: Its retirement systems have $9.2 billion in oil and gas assets, and another $209 billion in general equities.

Nationally, 2½ percent of U.S. pension equities, or $64 billion, are invested in oil and gas. That’s 9.9 percent of the industry’s total market value.

Should the feds raise the oil industry’s top marginal rate to 35 percent from 32 percent, companies have less money for investment and domestic oil production.

Corporate earnings would be reduced, which would mean lower dividends and stock prices for shareholders.

Put simply: For pensioners, the Energy Security Bill means reduced retirement security.

Thus, again, by sticking it to “Big Oil,” Democrats are sticking it to cops, firefighters, teachers and other civil servants.

Other benefactors of large, profitable trusts – think life insurance, philanthropic organizations, university endowments – also lose out.

Senate Democrats would do well to allow Pelosi’s foolish legislation to die a quiet death.