Friday, February 01, 2008

Highest Corporate Tax Bill in U.S. History? $30B

WSJ: Exxon Mobil Corp. posted the highest quarterly results in U.S. corporate history on the back of record oil prices. Exxon's annual after-tax profit of $40.6 billion was a record, exceeding the $39.5 billion it earned in 2006 (see chart above).

Corporate profits receive a lot of media attention, but what receives considerably less attention are the "corporate taxes" paid on corporate profits. Do a Google search for "Exxon profits" and you'll get about 8,000 hits. Now try "Exxon taxes" and you'll get a little more than 300 hits. That's a ratio of about 33 to 1.

I'm pretty sure that Exxon's tax payment in 2007 of $30 billion (that's $30,000,000,000) is probably a record, exceeding the $28 billion it paid last year.

By the way, Exxon pays taxes at a rate of 41% on its taxable income!

Update: The $40.6 billion and $39.5 billion figures are after-tax profits. For 2006, Exxon's EBT (earnings before tax) was $67.4 billion, it paid $27.9 billion in taxes (41.4% tax rate), and its NIAT (net income after tax), or profit, was $39.5 billion.


15 Comments:

At 2/01/2008 11:35 AM, Anonymous bob wright said...

So the $40B is after-tax profit?

 
At 2/01/2008 11:43 AM, Anonymous Anonymous said...

If there were some considerable tax advantage to not being in the U.S. couldn't Exxon effectively move to another country?

 
At 2/01/2008 11:46 AM, Blogger Marko said...

Exxon could probably buy another country.

All those years of negative profits and long term investment is finally paying off for Exxon. Wish I had invested in them.

 
At 2/01/2008 11:57 AM, Anonymous Anonymous said...

Yes, after 41% tax, profit is $40B. How dare they make that much money while the rest of us rubbage through garbage cans!

 
At 2/01/2008 11:57 AM, Blogger jalyo said...

Do we have a figure which tells us what the oil industry paid in total taxes?

 
At 2/01/2008 12:08 PM, Anonymous Anonymous said...

The biggest beneficiary of high oil prices is none other then our government, add in all the personal taxes paid on the products and you will see that government loves them and for a good reason, of course then again government is the reason oil prices are as high as they are in the first place.

 
At 2/01/2008 12:37 PM, Anonymous marmico said...

Huh, XOM hasn't increased its reserves or production in 5 years in the face of record nominal oil prices. All they do is buyback profits.

They ain't gonna be around in 10 years. Homeland Security and all that spook stuff.

Thank the heavens that XOM is making money and paying corporate taxes. Citigroup (and its peers) ain't on the radar screen for a couple of years, maybe never.

Sheesh, the publically held oil companies should be nationalized so every American can get a $500 cheque this summer and next summer and the summer thereafter, ad infinitum. LOL

As to your investment wishes, marko, well good luck.

 
At 2/01/2008 1:11 PM, Anonymous spencer said...

The effective corporate tax rate for the US is around 25%--tax payments as a % of pretax profits.

 
At 2/01/2008 2:45 PM, Blogger Rick Ballard said...

Exxon Mobil continues to outpace most of the integrated oil sector in reserves growth, announcing Thursday that it replaced 128% of oil and gas production in 2006.

Using the Securities and Exchange Commission's single-day, year-end pricing rule, Exxon's proved reserve additions last year totaled 2 billion barrels of oil equivalent. The Texas-based oil giant had 22.7 billion boe of reserves at yearend, giving the company a reserves life of 14.2 years at current production rates.

That was the '06 report - the '07 report will be out in a couple of weeks.

Then there's this report from the EIA from last year

"As of January 1, 2007, proved world oil reserves, as reported by Oil&Gas Journal,7 were estimated at 1,317 billion barrels—24 billion barrels (about 2 percent) higher than the estimate for 2006..."

which will also be updated soon.

 
At 2/01/2008 3:45 PM, Anonymous logicalopinion said...

Wait, those are just corporate taxes, right? Doesn't include the state and federal tax on gas sales at the pump? Because if not the total amount paid in taxes by Exxon is dramatically higher.

 
At 2/01/2008 4:25 PM, Blogger Rick Ballard said...

logicaljohn,

Isn't it more logical to observe that all taxes collected on gas are paid by the consumer? It's true that Exxon collects the taxes levied at the pump and passes them on to the Fed and State govs but corporate taxes are just another expense item on the income statement.

It's kind of tough to find an expense item that's not reflected in the price paid by the consumer.

Certainly, Exxon collects and passes on to the government far more than the $30 billion in corporate taxes but it's still the customer who pays.

 
At 2/02/2008 11:38 AM, Blogger Walt G. said...

Demonizing corporations is just another way for the government to get into our pockets with our blessing.

There is not such thing as a rich Mr. Exxon. He simply does not exist. Everyday stockholders like you and me are actually Exxon. I've got mutual funds that include Exxon stock; you probably do, too.

In essence, taxing Exxon is taxing us. We pay three times: at the pump, out of our dividends (corporate taxes), and again when we pay income taxes on any profits on Exxon stock or dividends.

Maybe we should all lobby our representatives to tax Exxon at 100% of all their profits. That will show Exxon who is boss. Or, will it?

As for nationalizing the oil companies, do you really want a government that operates with a $9 trillion deficit to run a company that can return billions of dollars a year in profits? I wouldn’t.

 
At 2/09/2008 9:50 AM, Blogger Moneyrunner said...

Rick,
I find it rather amazing that Exxon increased its proven reserves by that amount. Note that the reserves were increased in the “Mideast.” Thanks to Big Environment and their handmaidens in government, virtually all promising developments in and around the US have been stopped.

 
At 5/11/2008 11:24 PM, Blogger Bryce said...

@Walt G.

Your "We are all Exxon" point might be far more convincing if 50% of all non-real-estate wealth wasn't held by the wealthiest 1% of Americans. So taxing Exxon isn't taxing *us* so much as *the wealthiest 1% of us*.

Also, I would reverse your little aphorism, and say "Demonizing governments i

@everyone else

I pulled up Exxon's annual reports for 2006 and 2007. In 2006 they accrued a tax liability of 27.9B, but it looks like they only parted with 8B (the "income taxes payable" line item). In 2007, they got a bill for $29.8B, but only paid $10.6B. The rest for both years (a total of 43.7B) is listed under "deferred income tax liabilities". I'd like to see more arguing over which number tells a more accurate story.

Now I've downloaded 2005, where they got taxed $23.3B, but only paid $8.4B? What do the two numbers really mean, when the "actually paid" number seems to be consistently about 1/3 the total?

 
At 5/11/2008 11:38 PM, Blogger Bryce said...

As I forgot to finish saying: "Demonizing government is just another way for the corporations to get into our pockets with our blessing."

Like with Russia after Yeltsin dissolved Congress. The "reform machine" went into high gear, saying that the best thing for Russia's economy was to get all those valuable state-run businesses into private hands. Forget that the wealth that supposedly belonged to "the people" was being sold out from under them at pennies on the dollar. Sometimes fractions of a penny.

Spreading fear of government works to corporate advantage in another way: when people assume government isn't competent to regulate, the usual answer is to turn the job over to the people who "really understand the business," which is often code for the business itself. So we end up with laws engineered to "help the industry compete", like this list of about $26B/year worth of tax loopholes for the oil industry.

 

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