As mentioned in my previous post, Hillary Clinton has suggested taking “big oil” profits so that the government can invest them in environmentally friendly projects. The profits reported by Exxon-Mobil, which approached $40 billion last year, are admittedly high. But if high profits are a reason for confiscatory taxation, then perhaps Mrs. Clinton is overlooking some folks.
According to the Forbes list of highly paid celebrities, Stephen Spielberg reportedly topped the list, earning more than $300 million last year. The last time I checked, I think that even exceeds the highest paid executive out there. Others on the list earning 100 million or more include George Lucas, Howard Stern, Oprah, U2, and Jerry Seinfeld. See http://www.forbes.com/lists/2006/53/Compen_Salary.html . Lots of others are earning more than $50 million.
Of course, movie studios sometimes make out like bandits on films. Take “My Big Fat Greek Wedding”, which took in over $240 million in receipts, and cost only about $5 million to make. I’d say that’s a healthy profit margin. Yet, this is only number 44 on the top grossing films list. See http://www.imdb.com/boxoffice/alltimegross . (Would you believe Titanic is at the top of the list?)
One reason not to tax the winners heavily is that movies are highly variable investments. It can be difficult to predict if you will have a Titanic or an Ishtar that will lose big money. (For a paper on prediction of box office results, see this site: http://pages.stern.nyu.edu/~jsimonof/movies/movies.pdf ). But then again, isn’t that what happens every time “big oil” invests in a new oil well? Hmm.
As for the celebrities, some might object to taking away their profits because, after all, people like Spielberg, Lucas, Oprah, Stern, and Seinfeld are giving people something they want. (I will withhold comment on the quality of the content they are giving people.) Tiger Woods earned $90 million giving golf fans and consumers who buy the products he endorses what they want. But then again, isn’t that what is happening when you pull into the filling station? Is watching Tiger on TV somehow different than “putting a Tiger in your tank” (for those who remember the old Exxon ads)?
Beware of politicians who are cavalier about using government powers to take away from one group and to give to others. Even the high-earning celebs may not have a free pass under a future Clinton policy - especially if they keep hosting fundraising parties for Sen. Obama!