(Community Matters) So, no surprise I am against windfall profits taxes. Nevertheless, I am not a defender of oil & gas companies. I’ve heard the rhetoric that the oil companies pay an extraordinary amount of taxes. After reading this morning’s letter to the editor citing that Exxon Mobil paid as much as the bottom half of all Americans in income taxes last year, I had to check out the numbers.
So what I learned reviewing their 2007 annual report: their financial statements report $30B in income tax expense. And, if I’m reading the cash flow statement correctly, I only show $124 million deferred and in credits. Thus, it would appear Exxon did in fact pay 43% of its net earnings in income taxes (7% of $403B in revenues). Expenses included $1.5B for exploration and $12B in depreciation and depletion (the formulas for depletion are another form of questionable tax break frankly).
Also during the year, Exxon Mobil spent $15B investing in plant, property & equipment, paid $8B in dividends to shareholders and $33B buying back its own stock (effectively another dividend to shareholders). They ended the year with $34B in cash.
Tax credits and special allowances: I don’t know enough about these. Yet intuitively it pisses me off that while oil was selling for $60/barrel, Congress passed tax credits and tax breaks totaling $1.6B (July ’05 Bloomberg here) including waiving certain royalties for deep water holes. When Democrats tried to rescind oil company tax breaks & redirect these incentives to alternative energy earlier this year, Republicans blocked the legislation and Bush threatened a veto. Even though I oppose a windfall profits tax, the GOP and O&G interests might see it as a not-surprising populist response to lavish government treatment over the years & its insidious opposition to green house gas consciousness.
Community Matters 