Saturday, February 02, 2008

Putting Exxon's Tax Bill In Perspective

Over the last three years, Exxon Mobil has paid an average of $27 billion annually in taxes. That's $27,000,000,000 per year, a number so large it's hard to comprehend. Here's one way to put Exxon's taxes into perspective.

According to IRS data for 2004, the most recent year available:

Total number of tax returns: 130 million

Number of Tax Returns for the Bottom 50%: 65 million

Adjusted Gross Income for the Bottom 50%: $922 billion

Total Income Tax Paid by the Bottom 50%: $27.4 billion

Conclusion: In other words, just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers paid in 2004 (most recent year available), which is 65,000,000 people! Further, the tax rate for the bottom 50% was only 3% of adjusted gross income ($27.4 billion / $922 billion) in 2004, and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).

49 Comments:

At 2/02/2008 1:10 PM, Blogger spencer said...

but Exxon does not pay taxes.

It only collects them, either from its customers or its stockholders.

 
At 2/02/2008 1:30 PM, Anonymous Anonymous said...

still cant get my head around these stats

 
At 2/02/2008 1:35 PM, Anonymous Anonymous said...

Well, it pales in comparision to the amount of $$$ we in the bottom 50% pay it for its products.

But, it's fairly obvious with this staggering number as to who has the ear of the government.

-- top 1% vote == bottom 50% vote

Apparently, it's all fair this way.

 
At 2/02/2008 2:04 PM, Anonymous cranky said...

this may be old hat to you guys, but I can never find such clean stats as "these are the taxes Exxon paid". where did these stats come from? and, this may be silly, which government did Exxon pay these taxes to?

 
At 2/02/2008 3:09 PM, Anonymous Anonymous said...

...and where did the money come from to pay the taxes?

 
At 2/02/2008 3:33 PM, Anonymous Tom Armstrong said...

Cranky wants to know where the data come from. Check the SEC filings and the IRS Web site--they are all there. For example, in the 2006 10-K for Exxon, you'll see income taxes of $28 billion. In 2006, Exxon also collected and paid sales-based taxes of $30.3 billion and $39.2 billion in other taxes and duties. $98 billion total in taxes and duties. Granted, this money is collected from consumers, but don't blame Exxon for people having to pay taxes. Blame your government.

 
At 2/02/2008 5:35 PM, Anonymous Fred said...

That's very special, Spencer but, not really useful. Does it mean that I don't pay income tax because the tax payment comes from money I get from my employer? My employer is paying my income taxes?

What if my employer is Exxon? So, Exxon IS paying taxes after all.

 
At 2/02/2008 9:45 PM, Blogger David said...

fred..the point is, you are a *person* (unless you are a very clever bot), whereas Exxon is not. Only people can be the ultimate beneficiaries or (whatever the opposite of a beneficiary is) of any economic or other phenomena, since institutions are not conscious.

 
At 2/03/2008 4:09 PM, Blogger Wayne Adams said...

This comment has been removed by the author.

 
At 2/03/2008 4:14 PM, Blogger Wayne Adams said...

David,

It would be a hard case to make that the owners, employees, and management of Exxon, or any other business, don't "hurt" when the their taxes go up, their shares go down, or their profits drop.

Also, you comment about consciousness raises some questions. Do you then say that it's irrelevant to talk in terms of "family", "community", "labor unions", or "nations", since these institutions don't have exactly the same sense of consciousness in the same way of individual humans? Do we really interact in reality without a sense of the aggregate social awareness of the groups we're in?

In fact, there's probably a case to say that a business has more awareness of it's internal social consciousness than some other institutions.

 
At 2/05/2008 6:38 PM, Anonymous A More Inconvenient Truth said...

Statistics like this point to lowering corporate tax rates, in my opinion. I discuss this on my blog and the drastic (positive) effect it would have on our global competitiveness. By spurring growth of our economy we can increase the tax base. More here.

 
At 2/06/2008 5:26 PM, Anonymous Anonymous said...

Check your figures guy, That's $337,635,000.00 (337.6 Million)income and $27,000,000.00(27 Million tax)At least those are the figures at http://finance.yahoo.com/q/is?s=XOM&annual

 
At 2/06/2008 5:31 PM, Anonymous Anonymous said...

oops, it is billions, but still not the 41% that was claimed.

Sorry

 
At 2/07/2008 12:58 AM, Anonymous Anonymous said...

What the author intentionally left out was that Exxon paid an average of $27B in annual "GLOBAL" income taxes, of which more than 60% was paid to foreign governments based on US government statistics. That means Exxon paid less than $10B in US income taxes. He also misleads the reader by stating that Exxon pays 41% of it's income to taxes based on a mindless extrapolation of dividing it's 2006 income of $67B that's listed on Yahoo by $27B in taxes. Again, this is not the effective US corporate tax rate for the petroleum industry. Rather it is closer to 15% based on published corporate tax data and my mindless extrapolation of dividing Exxon's $67B of income by $10B of taxes paid in the US. (Hell, I wish I could only pay 15% income taxes). I'm sure Exxon's tax rate is even lower now since the 2005 tax breaks gifted to the oil industry.

It's still a lot of $$ in taxes, but Exxon is making a lot of profit which they are barely investing anything back into exploration (4%) and R&D (2%) on alternative energy that would help the US. Rather they are investing it in fat executive bonus'/retirement plans, stock divident/repurchasing and lobbyists.

But to add insult, the author compares Exxon's taxes to the "Bottom" US Taxpayer taxes. To put it into perspective, the average "Bottom" US taxpayer earns $10,000 per yr based on his numbers ($922B income/65M returns). A number so small that it's easy to comprehend. And of that $10,000 he pays $300 in taxes, leaving him $9,700 per year to live on. This is a far cry from the "billions" in profits that Exxon has earned in the same yr.

 
At 2/07/2008 11:41 AM, Anonymous Patrick said...

The figures also appear not to include FICA and Medicare taxes paid by lower-half taxpayers. For many people this is much more than they pay in income tax.

 
At 2/07/2008 12:29 PM, Blogger Mark J. Perry said...

Patrick: Exxon also pays FICA and other payroll taxes for all of its employees, and I am sure that is included in the $27 billion Exxon paid in corporate income taxes.

 
At 2/09/2008 9:33 AM, Blogger Moneyrunner said...

Patrick,

It’s misleading to suggest that taxes paid to other governments are not real taxes. If you lived part of your year in England and part in the US, part in California and part in Virginia and part in London using your logic it could be said that from the perspective of the each of the taxing authorities, you paid very little of your total annual income in taxes in their individual jurisdictions. Does that mean that your taxes are low? That is absurd, but it seems that is the argument you are making.

 
At 2/09/2008 9:43 AM, Blogger Moneyrunner said...

Anon at 12:58,

From the Tax Foundation.

Furthermore, the average effective tax rate on the major integrated oil and gas industry is estimated to equal 38.3 percent. This exceeds the estimated average effective tax rate of 32.3 percent for the market as a whole.

 
At 2/16/2008 1:33 AM, Blogger Gary Klockarman said...

Not only did Exxon Mobil pay $27 billion in federal taxes in 2004, but they paid $35.6 billion in dividends to shareholders in 2007. This pretty much goes against the CW that Big Oil's profits are kept by The Man.

 
At 2/21/2008 5:52 PM, Anonymous Anonymous said...

I just got an e-mail on this and wanted to weigh in briefly. This is aimed at Mark Perry. FICA and payroll taxes that Exxon pays should not and would not be included in income taxes, b/c they represent another type of tax. Don't you agree? Maybe I'm losing it and am by no means an accountant.

 
At 2/28/2008 4:10 PM, Anonymous Anonymous said...

The issue of FICA taxes is raised because the original comparison is nonsense. The vast majority of the tax burden for the lowest 50% of workers is their FICA/medicare taxes which is a tax that corporations don't pay. Comparing the two of them leads to nonsensical results.

 
At 4/05/2008 8:30 AM, Anonymous Anonymous said...

Yes exxon does pay federal income tax. U.S. tax records say 75 percent of U.S. tax payers make 50k or less. So the two answers are not a good comparison that one company pays more that 50 of the people. SO!!!

 
At 4/12/2008 5:47 PM, Anonymous Anonymous said...

You people know nothing about taxes. Of course Exxon pays FICA and Medicare - every employer in the U.S. pays 7.2% of payroll to the government while employees pay another 7.2% that is withheld from their checks. THESE TAXES ARE NOT INCLUDED THE INCOME TAX LINE OF THE FINANCIAL STATEMENTS. THEY APPEAR AS COMPENSATION EXPENSE. So go ahead and bump up that $27 billion.

Exxon doesn't pay a 15% tax rate. It pays the same 35% corporate rate on U.S. net income that everybody else does. Congress creates deductions that may reduce their taxable net income and reduce the EFFECTIVE rate but the actual 35% tax rate doesn't change. Those deductions are available to any taxpayer that meets them. If the deduction happens to be accelerated depreciation the cost of oil exploration equipment then your gasoline is cheaper for it. Quit complaining.

 
At 4/14/2008 6:33 AM, Anonymous Anonymous said...

This is a discussion is based on false premises. Exxon only paid about 5 billion in US income taxes. The rest was non-US (i.e. 24+ billion).

 
At 4/24/2008 9:03 AM, Anonymous Anonymous said...

The bottom line is Exxon is making a HUGE profit while most Americans are struggling with high gas prices. The sooner the world runs out of oil, the better this planet will be!!

 
At 5/06/2008 8:29 AM, Anonymous Anonymous said...

you're lumping in foreign income taxes that exxon paid into your tax number. as for its responsibility to the US, whose laws and agencies make it possible for exxon to function and make its money, exxon paid only 6% in US income taxes in 2007 ($4.4 billion out of $70 billion in before income tax profits --- check out their 10K on the SEC website).

 
At 6/11/2008 4:33 PM, Anonymous Anonymous said...

And where did these "obscene profits" go? Hmmm....well, some went into MY 401K and probably yours, too. And your neighbors. And those of a little of teachers, policemen and firefighters (whose pension funds invest heavily in Exxon.) So how much more do you want to take OUT of your retirement fund and put INTO Congress' hands to piss away on pet projects??

 
At 6/25/2008 2:01 PM, Anonymous Anonymous said...

This discussion is pointless. If Exxon is looking for a $40b bottom line, and it must pay $27b in taxes, it will charge $67b for its product. The money in this industry is made off crude, not refined product. It is not based on normal economic models. Buying the product is not optional for industrialized societies. The product's price is determined by a cartel, not market mechanics. Consumers pay their taxes. Anyone who says we don't... works for them and doesn't have the balls to say, "we are in business to reap the greatest profit possible, get over it." Nationalize it, or stop crying about it.

 
At 7/30/2008 2:22 PM, Anonymous Anonymous said...

How do we manage government, taxes, tax breaks, etc., effectively, when the average person doesn't understand the way that taxes work here, for it is very clear that most of them don't.
If our "representatives" do a bad job of representing us in this area than we are in deep trouble...

 
At 8/06/2008 5:10 PM, Blogger Keatsian said...

When Income tax first began in the early twentieth century, only the top one percent paid it. The entire tax was designed for those who benefited from the economy to help those on the bottom. That is the way it was and should still be, instead, my parents paid more last year in taxes at (30,000 a year) than my friend who made 500,000. We need to remove the money from elections if we ever want to fix this...

 
At 8/07/2008 10:17 PM, Anonymous Anonymous said...

One of the many Anonymous above wrote:
--------------
Check your figures guy, That's $337,635,000.00 (337.6 Million)income and $27,000,000.00(27 Million tax)At least those are the figures at http://finance.yahoo.com/q/is?s=XOM&annual
------------

Sorry other anonymous, but the 337.6 million figure is not income, it is revenue. Income is what is left over after all expense are paid.

The original blogger is correct, and the yahoo link you gave confirms it.

 
At 10/13/2008 1:57 PM, Anonymous Anonymous said...

Seems pretty straight forward then, fix the tax code in this country which is a freaking mess all around, limit the amount that any interest is able to spend on lobbying per year, and limit additional compensation, bonuses, stock option, etc. to a percentage of the employees annual salary, which is then limited to X amount greater than the lowest paid employee at the company.
I agree that the profits made by the oil companies are sick, but the worst thing to do is punish any business because they made too much money.

 
At 10/16/2008 3:13 AM, Blogger pscainc said...

The point you Libs fail to see is this:

If you exempted Corporations [Like Exxon] from paying income taxes, the cost of their products to you would go down by at least the amount of the taxes and probably more due to reduced Admin expense.

The "Tax Loss" would have to be made up by Who.

Taxpayers, of course. But who, exactly, would that be.

The bottom 50% of taxpayers pay only 3% of total Income taxes on their personal returns.

The top 5% of taxpayers, who pay 86% of taxes would pick up the tab.

Those of you, in the bottom 50% of taxpayers would pay less for your gas and it would cost you next to nothing in taxes.

But instead, you all think you will benefit by RAISING Taxes on corporations.

When you do that, who pays the increase?

YOU DO.

You are all idiots.

 
At 10/19/2008 9:09 AM, Anonymous Anonymous said...

According to 2007 Annual Report

Sales-based taxes 31.7 B
Other Taxes and Duties 40.9 B

Income Taxes 29.8 B
(taxes on profits)

Workforce
USA 30,000 employees
Worldwide 80,000 employees

They pay a little more than 10,000 per yr in annual salary to these employees, too. Maybe you people who can only earn 10,000 per year ought to look in the mirror and realize Exxon is not the problem, you are the problem.

 
At 10/30/2008 3:00 PM, Anonymous Anonymous said...

AND THE TOP 1 PERCENT OF AMERICANS OWN MORE THAN THE COMBINED WEALTH OF THE BOTTOM 90 (NINETY) PERCENT.

This is by the way, a greater concentration of wealth in the elite than any European nation, where I don't need to remind you still exist hereditary monarchies, Kings, Queens, and nobility.

Is this what we fought the American Revolution for? For the aristocracy?

Who cares if they pay 80 percent, and still take home billions in profit? I can hardly afford my heating bill and would be struggling even if my tax rate was zero percent.
And I work a good hard day just like they do.

Poor CEOs at Exxon..........

 
At 10/30/2008 3:04 PM, Anonymous Anonymous said...

>>And I work a good hard day just like they do.>>

Let me revise that:

And I work a good hard day just like they do.
To make them richer!

Give something back, losers for all the good fortune and riches this society gave you, and quit whining in your golden jaccuzzis.

 
At 10/30/2008 3:11 PM, Blogger Sir Rutherford said...

If you have to go to bed hungry on a regular basis, then your tax rate should be 0 percent.
I don't mind.

 
At 10/30/2008 3:25 PM, Anonymous Sade said...

You all may laugh me off, but I think there ought to be a law submitted and approved by Congress, that no single individual can own more than 1 Billion dollars of the nations wealth and assets. There should be a 'wealth ceiling'.

One billion dollars is more than enough reward one individual should be able to siphon off our society. Anything above that a person earns or makes (and we assume through the hard work of an army of underlings) should be required to be given to charity of their choice, or used for the common good of all Americans.

If only!

 
At 10/31/2008 9:08 AM, Blogger AZN said...

First, don't use Yahoo finance for your figures. At least pretend you're intelligent and use the SEC EDGAR.

Second, look at page 78 of the 10-K and look at Exxon US EBT vs Exxon US Tax. It's 35% or less.

I urge you to understand what you are talking about, both to the writer of this article, who has a PhD from [enter BS school here] and those who comment on this page. Please stop making America look retarded.

 
At 11/29/2008 11:41 AM, Anonymous Anonymous said...

AZN, I am trying to understand the report and page 78 and 79 on the 10-K. It looks like there was a potential to pay 29 billion worldwide in taxes. However I am trying to understand the 24 billion reduction to taxes described in page 79 plus the additional 5 billion that they believe they will recover. Overall it seems they would have only paid about $1 billion in taxes and then around $6 billion in pensions, etc.. Is this true am I reading this right?

 
At 12/15/2008 3:20 PM, Anonymous Anonymous said...

The jealousy and envy that so many have that someone actually profits from their business is amazing. There isn't a single person on this board who would not jump at the chance to make just as much money as these people at Exxon and other major corporations make. It is purely jealousy and envy. If you don't like helping them make a profit off of you then don't buy their products. Buy an electric car or ride the damned bus to work. But stop complaining that they don't pay their fair share when clearly they do, not to mention that they put their money and businesses at risk hiring tens of thousands of people, paying some of THEIR taxes too (namely FICA and other payroll taxes). They pay for most, if not all, your insurances...put money aside for your retirement...pay you 2-4 weeks per year for not even working...and even give you stock in their company...so you can even profit from their profits. So stop you stupid complaining.

 
At 12/15/2008 3:48 PM, Anonymous Anonymous said...

according to Spencer:

>>>but Exxon does not pay taxes.

>>>It only collects them, either from its customers or its stockholders.

Which would mean that the workers don't actually pay taxes, only the employers who pay their salaries do.

Which means that the customers who buy the products that provide money to the companies pay the taxes.

Which means the companies who pay the salaries of the customers who buy those products pay the taxes because they provide the money for them to buy the products.

Which, if carried to its end, would mean that only the Federal Reserve pays taxes. Because no one pays them anything. They just make the money out of thin air.

 
At 12/15/2008 3:54 PM, Anonymous Anonymous said...

<<<< -- top 1% vote == bottom 50% vote

Well, from a pure numbers stand point, you logic goes south.

But from what I assume is the intent of your post, you think that the corporate bigwigs have the same amount of political pull as the bottom 50% taxpayers.

Is there much difference between the political influence that corporations (who hire tens of millions of people), the political influence of unions, the political influence of the news media, the political influence of the Hollywood elite, and the political influence of our education system? Each and everyone of those groups strive to influence huge blocks of voters.

 
At 12/15/2008 3:58 PM, Anonymous Anonymous said...

One poster says that Exxon didn't pay 41% in taxes. They do this by comparing their taxes to their income. You must compare to AGI, not income. Your tax rates are based upon AGI, not income.

 
At 12/15/2008 4:01 PM, Anonymous Anonymous said...

Patrick says, "The figures also appear not to include FICA and Medicare taxes paid by lower-half taxpayers. For many people this is much more than they pay in income tax."

Then don't forget the amount of FICA and Medicare and other employment taxes that Exxon pays as well.

 
At 12/15/2008 4:04 PM, Anonymous Anonymous said...

Another poster says:

>>>>The issue of FICA taxes is raised because the original comparison is nonsense. The vast majority of the tax burden for the lowest 50% of workers is their FICA/medicare taxes which is a tax that corporations don't pay. Comparing the two of them leads to nonsensical results.

Since when don't corporations pay FICA, Medicare and other employment taxes? For every dollar an individual taxpayer pays in FICA, the employer pays an equal amount. So they not only do it for you, but for EVERY employee they hire.

 
At 12/15/2008 4:12 PM, Anonymous Anonymous said...

OMG...did I hear this one right...

"Nationalize it, or stop crying about it."

I cannot believe the number of people who decry Reaganomics, and blame it for the financial crisis we're currently experincing. They are wanting to socialize everything...healthcare, education, natural resources, everything. For all the ups and downs of capitalism, socialism has NEVER done anyone any good.

 
At 12/15/2008 4:20 PM, Anonymous Anonymous said...

Sade...I don't laugh you off....I feel sorry for you. You have so bought into that crap that it is difficult to even argue with you. So, if the stock values or real estate values or assets of an individual rises above $1Billion the government confiscates the excess?

What happens when the markets have their inevitable downturns. Will you want the government to have to give back the money? Or would those individuals be required to go back and re-earn it, pay more income taxes and then take the chance that if the markets go up too much they'll love even more money? What an insane idea.

 
At 4/07/2010 8:49 PM, Anonymous Anonymous said...

idiots and more idiots. If Exxon is getting a good deal then buy their stock. What the company makes - taxes paid either goes to reinvestment in the company which helps you or dividends which helps you or as the crazies would say to bloated corporate salaries. I would agree that upper management salaries are bloated but they are negligable compared to the money we are talking about, say 30 mil for the CEO and another 30 mil for other execs, .1 billion , doesn't hit the bottom line. So either admit they don't have such a sweet deal or just buy their stock and become Exxon.

 

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