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.