By now, many of you have probably heard Barack Obama’s commercial in which he proclaims he will impose a "windfall profits tax" on oil companies – specifically mentioning Exxon Mobil.
From an economics standpoint, it is an unavoidable fact that such a tax would harm shareholders of the affected companies. Oil industry analyst John Parry, senior vice president of John S. Herold, Inc., an independent research firm, explains it this way in this article:
"Giving that money (profits) to widows and retirees and grandmothers is good," said Parry. "This is a big help to smokestack America, which is holding big pension funds. If they want a windfall profits tax, taking 20 percent off the price of oil stocks, they’re going to drag down a lot of buying power and hurt a lot of people."
On a related note, most of you also probably know by now that Democratic Gubernatorial candidate Richard Moore has endorsed Obama.
What do these two things have in common? Plenty.
Richard Moore’s primary responsibility as State Treasurer has been to manage the state employee retirement pension fund. This fund provides retirement benefits for North Carolina’s retired teachers, firemen/women, rescue squad workers and most other former government employees.
The allocation of the fund’s overall "investment pool" consists of five primary subgroups: short-and long-term investment funds, the equity investment portfolio, the real estate investment portfolio, and the alternative investment portfolio.
A look through the treasurer’s FY2006-07 Annual Report reveals some of the top holdings in each of the "investment pool" categories. What is the number one holding for the equity investment portfolio? See for yourself:
That’s right, Exxon Mobil. In short, Treasurer Moore has endorsed a presidential candidate proposing a tax scheme that will hurt the returns of the very pension fund he has managed for the past seven years.
I’m not in the media, but if I was I just might consider asking him about this.
(HT: Francis D.)