August 30, 2006

ExxonMobil is Drowning in Taxes?

If you saw this ExxonMobil ad in the Washington Post the other day, in which the company claims to have a 275% tax rate on their profits last year, you were either impressed with Exxon's good corporate citizenship-- or wondered how they cooked the books to arrive at this number.

The ad asserts that "Last year, ExxonMobil earned about $36 billion, but incurred $99 billion in taxes worldwide." Pretty outrageous overtaxation if it's true. But in a new column in the American Prospect's online edition, Citizens for Tax Justice Director Bob McIntyre picks apart Exxonmobil's assertion by dusting off the company's annual financial reports:
First of all, the $36 billion that ExxonMobil’s ad says it earned worldwide in 2005 was after taxes, not before. The company’s pretax profit, i.e., what it paid income taxes on, was $59 billion. Second, it turns out that three-quarters of the “$99 billion” that ExxonMobil’s ad claims it paid in total taxes were actually gasoline taxes and similar foreign levies that were paid by its customers (and that didn’t come out of profits).
When the statistical dust clears, according to McIntyre, what ExxonMobil really paid was $23 billion in tax on $59 billion in profits-- a healthy, but hardly absurd, 40 percent rate.

In the wake of prior revelations that ExxonMobil had paid less than half of the 35 percent legal US corporate rate in the three years between 2001 and 2003, it's understandable that they'd be interested in burnishing their image a bit. But in the age of the on-line financial report, it's not difficult at all for good-government advocates to check up on these outlandish claims.


At 1:20 PM, Anonymous Anonymous said...

Its a wonder that Exxon has not gone the Cayman Islands route and avoided paying any corporate income taxes at all!

At 1:42 PM, Blogger Matt G said...

The main reason why Exxon is paying a respectable share of their profits in tax right now is this: every company has a certain array of tax loopholes at its disposal, and these loopholes are only worth so much. When your profits get really huge (as Exxon's have in recent years), eventually you use up all your loopholes-- you run out of ideas for zeroing out your tax.

At 8:34 AM, Anonymous Anonymous said...

It's not an outlandish claim. So it didn't come out of their profits, makes it even worse. Means you and I paid government 75 Billion dollars for the ability to buy the products.

At 8:44 AM, Anonymous Anonymous said...

Doesn't mater the split, the government reaps $100 billion on $377 billion in sales. Not a bad take. How much you think they should get?

At 9:19 AM, Anonymous Anonymous said...

They did not Claim they had a 275% tax on their profits. That's the way you chose to interpret what the ads says.


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