Exxon's 2007 Tax Bill: $30 Billion

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 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.]

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, which is 65,000,000 people! Further, the tax rate for the bottom 50% is only 3% of adjusted gross income ($27.4 billion / $922 billion), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).

Comments

[Fred Mitchel]

Let's all remember that Exxon-Mobil didn't in reality pay any taxes at all. We all paid that huge tax bill in the form of higher prices at the pump. Corporations never pay taxes, they just pass them on in the cost of their goods and services.

We'd all be way better off eliminating corporate taxes completely, and generating federal revenue exclusively from individual income taxes. Gross national individual income/federal budget = average tax rate. Sliding scale: those making the least pay a much lower percentage, those making the most (benefiting the most from our society and economy) pay a higher percentage. To file your taxes you look at one table. No exemptions. All sources of income count the same. This would give us a balanced federal budget every year, too.

[stephenrosenman]

also a huge amount of their profits come from international drilling and refining.
they bring home the bacon to the US

[Wez]

Now its clear why we don't matter.

[BKR]

Just think if XOM's taxable income was in line with the rest of the tax paying public we could totally eliminate taxes for the "lower 50%" and make a step toward leveling the income tax playing field.

[Mmarrkk]

BKR, the "lower 50%" already pay no income taxes. XOM makes less profit as a percent of revenue or a return on capital employed than most other businesses in the US. Why don't we tax the hell out of Microsoft or Pepsico or any of those high return companies? Could it be that its not politically expedient? Taxing a company because it is big is ridiculous.

Actually, taxing any company is ridiculous. As someone above so rightly pointed out, businesses don't pay taxes. They pass them on as a cost of doing business. We as consumers pay the taxes.

[Bastiat]

A couple commenters aren’t quite on target regarding who pays the ExxonMobil (XOM) tax bill.

The fact is that consumers do not pay XOM's income tax bill (I believe that Mark Perry refers only to the income tax bill.) Only XOM shareholders pay that bill. Taxes are paid on net income, which is the profit left after costs incurred in the manufacturing process (e.g., higher crude oil prices; energy input costs; etc...)

The taxes that consumers do pay related to XOM are the excise taxes (state and federal) on gasoline. These are completely unrelated to the pre-tax price at which a retail gasoline merchant sells product. That price is a function of manufacturing / transport / marketing costs and the competitiveness of the market. Retail gasoline is as close to a textbook price-competitive market as one can find (at which price equals marginal cost.)

As a former corporate finance specialist for ExxonMobil I can assure readers that the retail gasoline and diesel business in North America is usually only marginally profitable. The attractive returns in the integrated oil and gas business recently have been in refining, where huge barriers to entry and rewards for economies of scale exist, and of course in the highly risky business of exploring for, finding and producing crude oil.

Finally, even though consumers do not directly pay XOM's income tax bill when they buy gasoline at an Exxon or Mobil station, we pay it nevertheless because most of us are XOM shareholders to some degree. From blue-collar workers to Wall Street titans we have an interest in pension funds or investment portfolios that carry large chunks of XOM stock.

As Peter Drucker once noted, if we define socialism as the common ownership of economic assets then the United States via it's pension funds and widely dispersed investment wealth is the most socialist nation in human history.

[vikingv]

The math does not add up correctly. This is a bogus article. Completely fabricated. The top US Corporate tax rate is 35%. So Exxon cannot have a tax rate of 41.4%, impossible. The lower 50% of American Income is $14,000 on average according to this jokster. Jesus, we must be an exceptionally poor nation to have such a low income average for half the nation. I dare say his facts are fucked or America is a third world developing country.

[Bastiat]

vikingv:

An American individual doesn't begin to pay income taxes until he has adjusted gross income of slightly north of $30k. Up to that level deductions serve to negate any income tax.

The 35% rate is a marginal US income tax rate. The 41.4% rate is an average rate that covers all sorts of income (much of it outside the US) fro sales, asset dispositions, etc..., some of which is taxed at rates much higher than 35%.

Not that you're particularly interested in accurate details...

[Bastiat]

Whoops... actually the $30k AGI figure I cited is for a joint return. For an individual the taxable AGI threshhold is around $20k or so.

[betaray]

For a Ph.D. in economics, you have a poor understanding of the terminology of your field. Do you know the difference between "income tax expense" and the actual payments to the IRS are? I do. It's "deferred income tax". It doesn't look like the '08 numbers will be out until February, but for '06 the deferred income tax of Exxon was about $21b. This puts their actual tax payments at about $7b and the tax rate on their profits at at a bit above 10% here.

This more than anything is why our tax code is so bad. If a Ph.D. can't figure out how much a corporation actually pays in taxes, how is the average voter supposed to make informed decisions?

[Bastiat]

betaray... you make a good point but only halfway. You need to distinguish between book taxes and cash taxes. Income tax expense is based on accounting (book) taxes. The amount added to deferred taxes roughly equals the timing difference between book taxes and cash taxes actually paid. This difference arises because, for instance, depreciation on capital equipment is faster for cash tax purposes than for book purposes.

Therefore, because cash tax depreciation is faster, the depreciation amounts are larger each year during the life of the capital asset and income is reduced by more than it would be under book depreciation. Thus, cash taxes are lower than book taxes.

What you've missed, however, is that while this year's income tax expense will translate into some deferred taxes this year's cash taxes will include deferred taxes accrued in previous years and paid this year. So your analysis that yields a 10% tax rate isn't correct.

I don't know what Exxon will pay in cash taxes this year. I haven't looked at its financial statements lately. I do know, however, that most all of its income tax expense will translate to cash taxes at some point. So your point really comes down to the difference between tax expense today and the net present value of deferred taxes plus cash tax paid this period. The $21 billion figure you quote is undiscounted; the actual NPV of the deferred amount is much lower.

[AKJ]

Don't forget that Exxon Mobil and other oil and gas companies benefit from amazingly generous tax breaks, credits and discounted federal mineral rights that no other industry even approaches. If you have any doubt that we are a nation addicted to oil, just add up the "oil and gas only" tax breaks in the code. There's even a credit for depletion of the oil in the ground as they pump it out - literally the desired outcome of the company generates a tax break. One would think we were trying to nurture a nascent industry versus the largest corporation in the world.

And don't even begin to complain about taxes at the pump. They are comparatively low to laughable compared to the rest of the developed world who treats gas consumption as a social burden and invests in novel concepts like mass transportation and fuel efficiency.

The size of Exxon Mobil is staggering. Their tax bill is not in comparison. The size and scope of tax deductions they enjoy make their tax burden relatively low. The tax code has been setup to treat profit from oil exploration as more sacred.

[Fred Roth]

Whatever taxes XOM pays, it could definitely pay more. Pull up a 5 year chart of XOM's share price. SP has tripled in 5 years. Shareholders have laughed all the way to the bank.

[Anwar Bhamla]

The article is obviously biased in favor of XOM. The book or accrued taxes are just an accounting term. The more relevant amount is actual cash taxes paid out. Most tax liability is deferred for ever. Yes, the tax deferred from sometime in the past is due today, but it is more than offset by a much larger deferral from the current periods. The result is as long as the company continues to purchase capital assets it will not pay the deferred taxes. Just pull out XOM's balance sheet for the last 5 years and check out the cash taxes paid. I bet it will be less than $6 billion per year. I also bet that it is lower than the average tax rate paid by the lower 50% of the population!

[eternitus]

Um, net deferred tax liability increased by less than $200 million last year (meaning your points about deferred taxes are moot in relation to Dr. Perry's argument). If you believe XOM shareholders are making obscene profits (and will continue to make such profits), you really ought to buy XOM stock, which you can purchase for next to nothing in brokerage fees.

A few points to remember:
1. You are not entitled to anything... cheap gasoline included.
2. The point of setting up a for-profit business is TO MAKE PROFITS.
3. Exxon does not set the price of oil.
4. Exxon's profit margins are 11%, not unreasonable when you compare it to Pfizer, which manages to make 17% on the backs of the sick and dying (who may not have an analogous option to number 4 below).
4. If you are dissatisfied with the price of gasoline, you may, at any time, take a train, ride a bike, walk, or ride the bus. All of these options will reduce your energy costs.

[betaray]

4. If you are dissatisfied with the price of gasoline, you may, at any time, take a train, ride a bike, walk, or ride the bus. All of these options will reduce your energy costs.

I wouldn't say I'm dissatisfied by the price, but the fact you act like we have a choice in the matter shows your ignorance. Maybe it's mine... remind me, which federal agency spends $30+ billion on bike trails. I see Amtrak subsidized with about $1 billion a year. Heck in my city we don't even have sidewalks between neighborhoods, much less the opportunity to work anywhere within walking distance of an affordable home.

Each dollar poured into the highway system is another dollar wasted on an inefficient transportation system. This is a system which kills 40,000 people a year. It's a system designed to maximize personal consumption at the cost of lives, the environment, and natural resources.

I don't think Exxon is unjustified in their profits, but this articles premise is, "look at how much they give back to us!" which is, frankly, bullshit.

[betaray]

Re: Bastiat

I'll just quote Anwar Bhamla for emphasis"

"Most tax liability is deferred for ever."

[Mmarrkk]

Great discussion. One fact that seems lost on many here is that XOM doesn't make all of its money here in the good ol' US of A. And they don't make all of their money selling gasoline. In many countries, XOM produces oil and gas and sells it in raw form. So, a very large part of their income is derived in other sovereign countries. The fact that we feel that we can tax money made in other countries has always amazed me.

Now, for those with their panties and skivvies in a wad about the tax breaks given the industry, do you really think doing away with these will help us get more domestic oil and gas? Those breaks make it economical to drill wells. Without them, the wells will not meet investment return hurdles and simply won't be drilled. I've seen this hundreds of times in analyzing projects and running economics. Either the royalty rates/burdens or the costs or the taxes were too high so the project just wasn't pursued. Now, would you rather give XOM a tax break and they invest in a $4 billion LNG plant/project, or they don't get the tax break, they don't do the project and natural gas prices in the US float up to about $12/MCF?? What about the poor people freezing in New England? Ok, well what about the poor people freezing in places I give a darned about?? What about the CHILLLLDDDRRREEEENNNNN... OMG, I'm starting to sound like a Democrat. time to go.

[borfish]

I would like to see the photo copy of the check that exxon paid the government. Also can anybody explain why a company that earns so much money needs tax breaks?

[gym]

In the wonderful state of Minnesota, between the fed & state taxesthe government makes almost 45 cents per gal. (going up very soon!) that is roughly 5 times as much as the oil company makes per gallon. The govt. does nothing other than takes 41 percent from a law abiding company that provides one of the most wonderful product that improves everyones life including people that are foolish enough to whine that the UNITED STATES isn't fair! For goodness sakes get off your butt & work. This is the greatest country God gave man! If you can't make it here (the country where the "poor" are fat,have tv,cell phones,cars ,beds,roof overhead etc.) I tend to think it's your fault! I don't believe it is my fault, Exxon's, George Bush's or any one else who has worked hard and succeded! Take a good hard look in the mirror - and before any of you write back about that I sound like a spoiled rich kid, guess again ! I have drug my self up from a poor childhood, drugs,alcohol & a number of phsyical problems through faith, hard work & very little luck. I now own my own company, have a wonderful wife of over 13 years (first wife) & have a wonderful, bright, lovely, empathetic seven year old daughter. Good lord this is a wonderful country!! My 5 sibblings also have comperable stories (also all on their first spouse's) one of them has even risen to the ranks of a general in the US military, all of us from the same humble, bleak & trying beginings. Once again, maybe its not the rest of the world that's the problem, quit whinning, put your head down and push forward. God bless you & this great nation.

[gym]

Sorry for going off topic at the end of my rant. my basic points are:
Don't be mad at exxon for making a profit it's what there supposed to do - many people with 401k and other plans benefit from this.

The government makes many times what Exxon & others do for doing litteraly nothing other than income redistribution.

Exxon does not set the world crude oil price. Supply & demand does.

Reduced refinary capacity, ethanol boondoggles (we now import refined gasoline & ethanol from other countries) and the dozens of gasoline formulas are all major components to high gas prices.

MY final point is that just because Exxon makes a lot of money doesn't mean that no one else can - profit is not a pie, they didn't keep anyone else from making money by taking there piece. We live in a wonderful country full of freedom & opportunity - go out and start your own Exxon!

[jimispod]

How long would it take XOM to move it's corperate headqtrs. to Dubai, or The Grand Caymans, etc. if the Federal Government imposed a windfall profits tax? This is purely political. No rational person can believe that this type taxation policy could be legislated, much less legitimate.

[User 163273]

Interesting but, I believe, flawed analysis. Personally, as you note, I pay taxes on my income not my take home. XOM had income of $404B, that's $404,000,000,000. A quick calc shows that they are only paying about 7.4% tax! Wow, I wish I could have closed door, top-secret meetings with the VP to work out ways to benefit me at the publics expense.

Additionally, note, that unlike you and me, XOM carries a ton of tax liability around from year to year. Notice the current $22B on their balance sheet. This is because they have a team of tax litigation consultants/lawyers working to find ways to offset these liabilities from year to year. So although their bill might be $30B, they won't pay that much. So, thankfully, I know I will be able to sleep better tonight not worrying about a company that will have to pay an outrageous tax rate of 7.4%!! (This is why the legitimate business press does not go around saying Exxon overpays their taxes. They simply don't pay as much (on a percentage basis) as you and I.

Enjoy.

[Hahaha$$$]

Fred Roth & others - I make less than $30,000 a year. I do without a lot of things I'm sure you people can't live without. I do this so I can invest WISELY through IRA's and Mutual Funds and my 401K with these "corrupt corporations." You people go ahead and depend on "Big Brother" to support you when you are old and gray. I'll rely on those who know how to make money and make it work for me.

[Bob P]

Funny how they still managed to get about 9 billion in profits: www.washingtonpost.com...

My first reaction to this is that it was written by Exxon Marketing. ( Billion is enough to pay the entire mean earnings to 257,000 families this year. Hmmmmmmm seems like they are really hurting...
Bob P

[GIJane]

What people should be concerned with is where those tax dollars are spent...not in the independence of Americans from foreign oil!

[Workin4aLivin]

As for the comment that anyone that makes less than $30,000 doesn't pay taxes... that's BS.
My husband still owes $800 of $1600 in federal takes from 3 years ago when he made $19,000. This year, we made a combined income of $40,000 and have a baby on the way. I won't be surprised if we end up owing again an have to use our "stimulus package" check just to call off the IRS attack dogs. I just don't understand how a federal government can ask so much of us when a family of 3 is going to live in a crappy basement apartment without health insurance. I'm going to try having my baby out of the hospital to save the money to pay uncle same.

[User 171237]

Just my opinion, of course; but, if I were making $40,000, living in a crappy basement apartment and without health insurance, I don't belive I would be having babies.

[KarlH]

I'm with User 171237. If you still owe $800 on a 3 year old tax bill, you definately have problems. Why must I et al, solve your money troubles?
The IRS attack dogs on $800... I wish my life were so simple.

Clearly you are young and there is no shame in that. You are where you are supposed to be.

the world is a bigger picture than your crappy basement apartment with no marketable education and no entreprenurial skills. The upper 5% of earners in this county pay 39% of the tax bill.

I don't mean to be cruel, however; Which one of us should pay for your family to live? You? The government? Me? Someone else? Which one of us? Does George W owe you a decent living?

Or should it be the grownup parents of your child?

Sorry to be blunt, not sorry to be truthful
Karl

[mike209]

I think XOM is entitled to all of the profits they can earn. After all they take the risk in exploration, drilling and transporting crude oil. My questin is why isn't our government working with XOM to develop new refineries in the US to produce more gasoline at a lower cost? One of the reasons we have high gas prices is because the government closed down all of the independent refineries in the US.

[VirginiaCavs19]

Who really cares what taxes they pay? If they paid 30 billion in taxes and still made 40 billion in profit, does it really matter? what matters is the fact that Americans are getting hosed every time they go to the pump. The government needs to start building more refineries, using the so called tax money to come up with more fuel efficient products, build public transportaion systems and stop raping me every time I want to mow my grass.

[Workin4aLivin]

"$800... I wish my life were so simple"

Not "owed", rather "still owe." Most of the bill was already paid. $800 is what we STILL owe. No one's paying for us; we're taking care of ourselves.

What kills me is the handouts that lenders, and soon, house-flipping speculators are getting. What ever happened to all that helpful conservative advise I always get: "Pull yourself up by your bootstraps!" HA! That argument only works until the shoe's on the other foot, and then conservative capitalists run to mommy government just as quickly as the populist liberal.

BTW. Nice comment about "no marketable skills." I have a 4-year degree and currently work full time in web design and marketing. My husband has a 2-year and works with disabled children. But hey, if it makes you feel better to think that we're just poor dumb gas-station workers, you go right ahead. (If I had it to do over again, I'd rather have my $40,000 back than have a degree. Everything I do at work was self-taught anyway.)

I don't really care if corporate taxes or capital gains goes up or down. So many other thing factor into the national debt that I also can't control so it doesn't matter. Some day, something major will change (flat tax, VAT tax, etc.), until then, I'll just deal with the way the wind blows.

I just wish the working-poor/lower-mid... could get some friggin' respect! I'm not askin' for a break, or for pity, or for a hand-out (and we've gotten none)... we're gonna do just fine 'cause we know how to make due with less than you poor SOBs up there on the hill with up-side-down mortgages.

I'm paying a midwife $3000 bucks cash so I can have my kid at home, then I'm gonna' strap that little sucker to my back, head back to the office, and flop a breast out when he squalls. That's the determination and Yankee thrift that built America, and that's what'll build it again when the bankers are done with it.

Just remember, it wasn't the farmers and workers throwing themselves out of windows on Wall Street during the Great Depression, it was those who were "kings in their own eyes" and couldn't take the humbling.

[A mechanic40 years]

it amazes me all the people how think someone owes them a free lunch!
when it's all gone , you pray for the blessing for XOM.
Good luck finding and delivering into you own lap, a great product.
I stead ,stop whining and buy some XOM stock and became part of the solution , instead of a cry baby.
While your at it , try cutting 3000 lbs of useless steel off your silly SUV, H2 or what ever.
do something and stop y crying.

[Steve1776]

User163273

You pay taxes and spend what is left. EXOM spends and then pays taxes on what is left. That is why you can give yourself a $3-5K raise by starting a home business. Then you get to deduct your business expenses and pay taxes on whats left.

I suggest you read "Rich Dad, Poor Dad" by Robert Kiasaki (not sure about the spelling of the name). You can get it any bookstore or Amazon.com

[alsassets]

My question when I hear "profit" figures is always, "What is the ROI? The return on investment?" Naturally, one would expect a large profit on a large volume on a large investment. Supermarket chains make a large dollar profit, but it is a small percentage of investment and volume. So, does anyone know what Exxon/Mobil's ROI is? Ditto for BPA and the others?

[SMOKEGOESUP]

Somehow his math doesn't come out right - he fails to "graph" the total income and then says that "Exon" pays 41% . I imagine the corporate lawyers, whose salaries are tax deductible, have scammed every loophole available and this corporation doesn't pay any more taxes that any other oil company. They still are sand-bagging paying for the oil spill in Prince William Sound - so don't brag to me how much tax they are paying!

[AlredJSenior]

The Exon Corporation pays its federal corporate taxes - 41% on its gross profits. It netted about 5 cents per gallon of gasoline sold. If its revenues went up dramatically it sold a lot more gas.

But that's not the end of the story. Every federal and state regulation regarding the industry is essentially an additional government tax on that industry as the oil industry's resources are used to serve government purposes not corporate purposes. Those sort of regulation taxes are well hidden within the corporations cost of doing business.

Anti trust regulation also prohibits vertical and horizontal monopolistic corportate behavior, forcing sales between functional entities at many junctions in the oil business from exploration to production to pump sales. Money changing hands at each juncture is seen as a business transation by separate businesses and taxed accordingly. A barrel of oil will be taxed many times through many businesses before it is eventually sold at the pump. This is an additional govenment taxing system that is hidden in the cost of doing the oil business.

In addition Exon Corp isn't a company of one or two private owners. It is a corporation. It has shareholders. So that when the large portion of the Exon Corp net profit is distributed annually to tens of thousands of shareholders (mutual share investors, retirement program investors, individual investors, other "institutional investors") in the form of dividends and capital gains, that same Exon net profit money is again taxed by the state and federal governments according to each investors personal status and income situation.

Bottom line: Government combined by far makes the greatest profit off the oil industry. Much more than the obvious 40 to 60 cents net off each gallon sold at the pump compared to an average net of 5 cents per gallon for the oil companies.

Conclusion: it is government not "big oil" that has by far the most to lose in the move to alternative (non petroleum/carbon based) energy systems. Big oil would mostly lose the enormous costs including the enormous government related costs associated with the oil industry. It is big government NOT big oil that is holding up energy progress and driving up the price of energy.

Remember just off the corporate tax on Exon Corp alone the federal government made 41% of what Exon and its shareholders made. So who is "gouging" the American public? Exon or the government.

[Pinball]

I have reviewed some of these comments--what is obvious to me is that Exon is making a whale of a lot of money and the American public is paying thru the nose. Most guys on the street would not be conversant with the more exotic elements of the argument, couched in terms that I seem to remember from my college economics books.
Oil prices are screwing us--now reflected in everything we buy, particularly food. People on fixed incomes are scuttling about trying to make ends meet. Not a good scene.
Meanwhile we all jabber, jabber, jabber.

[Piggy]

I'm no hippy or anything just a small businessman in Chicago and the reality is we as Americans have been pigs for too long and deserve it. If you can't afford to fill up your car get a more efficient car and a cheaper monthly note. I drive a Pathfinder and the lease payment is $550 per month and it gets about 13 mpg. I drive about 1k miles per month and with insurance,gas etc. my total cost per month is about $950. Cut down on my huge payment and get something in the 20 mpg range and it's much more affordable.

[Jeebus Krust]

GREEDY FILTHY PIGS! FUCKEM!

[DLA]

30 Billion in Taxes!! So THAT's WHY GAS price at the PUMP is SO HIGH!!

ITS THE GOVERNMENT that's causing the price to go up! Why isn't anyone talking about that, and also all the restrictions they put on oil companies which also drives up prices even further.

Where are the people with brains will see this and not the rhetoric about blaming Big Oil!

[Toad734]

does that include their 2.6 Billion dollars in Subsidies they receive of tax payers money? What are they doing with that 42 Billion of profit? Where does it go,why do they need my tax money? From what they say they can't use it to explore for more oil because of tree huggers and they aren't building any new refineries so where does it go? Why do they need our welfare?

[User 208231]

I really like this article thanks

[Worken 2get ahead]

Why is everyone so angry with a company making money? Don't we all aspire to make a lot of money? Is XOM breaking the law? Why are we treating them as if they have? When will we realize it is our own "Elected Gov't" and not business that is failing us? Do people not understand what a free market does? When the gov't restricts competion and or creates barriers to entry we all lose. And yet some people still think the solution is to vote for a liberal who only wants to redistribute wealth....Insanity.

[Worken 2get ahead]

Frustrate a liberal- work, be happy, be successful

[conservative]

I propose a windfall tax on authors:

Barack Obama said yesterday that he wants to impose a "windfall profits tax" on American oil companies. This is a stupid idea, unless you want to reduce the supply of oil and thereby increase prices even further.

But it did cause me to wonder why we don't have a windfall profits tax on authors. Think about it: it takes as much work to write a 300-page book that sells 1,000 copies as to write one that sells 1,000,000. Yet the former author is paid almost nothing, while the author who happens to write a best-seller gets rich. Where is the fairness in that? Besides, the oil companies need their profits to make huge capital investments in oil drilling equipment, ocean platforms, pipelines, and so on. What capital investment does an author need his windfall profits in order to make? A new pencil? An author could easily pay extra taxes on his windfall profits and have plenty of capital left over for his next book.

A windfall profits tax on authors seems like a no-brainer. Coincidentally, Barack Obama's 2007 income of around $4.2 million came almost entirely from book royalties. Now, that's what I call a windfall! If authors' windfall profits are taxed at 90%, Obama can write a check to the Treasury for around $3.2 million. What do you say, Barack? Why not a windfall profits tax on authors?

[conservative]

above courtesy of: www.powerlineblog.com/...

[conservative]

Folks, a little Econ 101 mixed with a little geography mixed and a small dash of current events will tell you why we are paying more at the pump and why US oil companies are making large profits.

First, why is oil getting more expensive for Americans?

We have US Dollars, and we want to buy oil on the open market.

The idiot liberals see the US Dollar as a static element in this equation, but the FACT is, the dollar is dropping. Do any of you fools leave this country? The Canadian Loony is now on par with our green-back. Now, if we were using GBP (Great Britain Pounds) to buy our fuel, it'd be about the same price. If we were using gold, it would be cheaper. But we are not, we're using US Dollars. So when the value of the dollar goes down, it takes more dollars to buy the same thing it did yesterday. So oil is going up, dollar is going down, the affect to us is a double negative.

If we would DRILL our own oil, we wouldn't be penalized for a weak dollar because we wouldn't be buying it on the open market. We'd also be adding to the global supply which would drive the price down.

Second, India and China are just starting to rev. up their economies. These countries are just starting to use oil on a large scale, when they were not doing so 10 years ago. This is driving demand through the roof, while supply is remaining stagnant.

Why are US oil companies making so much profit? Couple reasons: first, as I noted above India and China are now large customers. Second, economies of scale... it's because of the massive volume. These are global companies folks... somebody, please read XOM's 10-K. They are making their money internationally, not domestically. Get it?

The weak dollar helps them on the international stage as well. They are a global company but they report earnings according to US GAAP, converted into US Dollars for the American SEC. This means that 10 years ago GBP 100 in profit would have translated into USD 150. Today, it translates into USD 200. Get it? More profit in USD due to the weak dollar even if their local currency profits are static.

[Leo theLion King]

Do ExxonMobil or other American Oil companies receive any tax breaks or incentives which offset...oh I see someone already mentioned the 2.6 Billion in subsidies or what is known as 'corporate welfare' that for some reason they still need- good on ya Toad!

And others have made a great point about ExxonMobil still not paying the settlement to the people whose lives were destroyed, a significant number of which have died during the the Prince William Sound fiasco- 20 years and Exxon still doesn't want to do the right thing- even with these record profits!

Thank God for you Mark Perry! I mean- if you don't defend the energy companies who will? I mean- it's not like they can afford to PAY to be protected, right!??!

; )

Keep up the great work- you're a real live shining knight lol
(except for the part where you make me throw up)

Thank God for liberal values! Change is coming baby!

[Loki]

I see people posting about how much in taxes XOM pays as opposed to the lower 50% of the population, but no one ever states what their percentage of income is in relation to the total income of everyone (especially the lower 50%)...if you make the most you should pay the most, plain and simple.

[Loki]

The only way to lower the price of a gallon of gas right now would be to suspend trading of oil futures indefinitely...those speculators are the ones driving up the price of oil.
Are they doing it to cause an economic collapse here in America? If it hits $150 or more a barrel, watch out...

[Worken 2get ahead]

Again this should not be about how much a money oil companies make people. It should be about policies the detract from a free market.
Again who is the gov't to decide how much is wind fall? We should all be terrified when the gov't says "hey you make to much we want more...." This will do nothing to fix the oil prices. Nothing. More likely it will hurt us more. These are failed policies.

[PoorWorkingStiff]

Just curious, how did you arrive at the $30 billion in taxes? When I go to their 2007 Financial and Operation report (see their website), I find the following items:

"Sales and other operating revenue includes sales-based taxes of $31,728 million" (footnote on page 2)

"Income taxes $29,864 million" (page 16)

"Sales based taxes $31,728 million" (page 16)

"Other taxes and duties $40,953 million" (page 16)

Which totals $102,545 million (or $102.545 billion) in taxes.

[Waiting foraction]

I have read all these comments and it seems to me we are spending too much time worrying about Exxon and their profits... Hopefully an American company can make a profit and hopefully spend some of it here....

The real issue should be all of you picking up a pin and writing your Senator and Congressman and demanding that they do whatever is necessary to become energy independent. That includes building refineries in the US, opening up "every" reserve we have within US control and doing everything we can to stick it up the real problem, foreign producers and countries, like Venezuela and Iran, who are speculating on oil futures and making a bundle on it....

Why is our government not acting with a single front and confronting the head on? We have some of the largest reserves of oil and natural gas on the earth and “will not product them”!!!
If you want to change the dynamics, tell the world we will produce them and refine them and keep it all for ourselves……..

[Mosey 1950]

I've enjoyed reading every post. You accounting guys have given me a headache :). One reason why I hated the subject in college. We are all at fault for having such low expectations of our elected officials. Since Gerry Ford, every President has given State of the Union speeches saying we must become energy independant. The result, well we all know. I for one, write my "elected officials" from South Carolina on a very regular basis. Recently, I chastized our Republican governor who said he opposed offshore drilling because of the sensitivity to the tourist trade. My comment? If the tourists can't get to SC, what the hell does the difference make? Let's all just use some common sense and American ingenuity. We can get thru this together with leaders who will be truthful and not idolize the damn polls. Get involved folks, raise a little...y'all take care and be nice to each other. We only get to live once!

[Waiting foraction]

Looks like the issue will be divided again... The Republicans on the get more product and use supply and demand to solve it and the Democrats on the other - tax the "Big Oil" companies and do nothing about supply - but hit the consumer in the pants for being too wasteful...

Get real... Windfall Profits Tax did not work last time and it will not work now.

Our elected officials need to be held accountable for this mess... We should demand that they use every means possible to let the world know, especially the other producers, that we the largest consumer will not be held hostage by them. Open up the flood gates and start drilling and refining some US oil from any place we have reserves....

[DDeb]

What this country needs is for big business to stop running it and allow a government for the people by the people. I love some of the comments I'm reading defending XOM and blaming the poor for the mess that they're in. Are you people serious? I hope you all have good jobs with good insurance because the majority of people out there are stuck in low wage jobs with no insurance and god forbid they get sick.

I have no sympathy for people who buy into the myth that you can buy a house outside of your means (or on an interest only mortgage), run up huge credit card debt and expect to be bailed out, they brought that upon themselves by believing the bullshit that they're "owed" something, but show a little compassion for the working poor who are trying to make a go of it without going into debt and without asking for hand-outs.

Unlike XOM who are crying the blues because the government wants to take away their $18 billion subsidy. Oh, wait - the article doesn't mention that does it.

[DDeb]

Oh and people need to start walking or riding a bicycle or investing in a hybrid car. Oil is not infinite and we need to use the handouts that are going to XOM etal towards researching alternative fuels.

[mbmbythesea]

I'm so glad you so many of you guys can see through this smokescreen and won't accept the b.s. oil company promotional nonsense. from these other guys: such fine intelligence utilized to defend the oil industry! wow, guess you don't get to put down the b.s. lies when you go home (or even when you retire or move on!), if you're making that kind of money, I guess you have to drink the koolaid. nothing boggles the mind like the tax code...what did shakespeare say about throwing all (tax) attorneys and the like to the bottom of the sea? Please start with our author here, Dr. "I sold my soul--and soldout my fellow man--for oil" Perry. As to content: We need to go electric folks..and the oil companies won't let us get there. Please ck out www.ev1.org

[fjasyr]

If you read their 2007annual report, you come away with the impression that Exxon Mobil paid $29.8 billion dollars in US income taxes. That’s 42% of their net income before taxes. However, the percent that is actually US income taxes is less than the rate of payroll taxes deducted from a worker’s wages.

I suggest you examine all of the details of its financial statements that are fully disclosed in the Security Exchange Commission report (K-10) which the company is required to file. In the 2007 report, Exxon Mobil states it’s net income before taxes was $70,474,000 and while the company’s consolidated statement reported “income taxes” of $29,864,000, the breakdown reveals only $4,490,000 was actually US Federal Income Taxes. That represents 6.4%.of its total income before taxes. The remaining portion, after US state income taxes, amounted to $24,744,000 in foreign income taxes.

I hope that in the future you use all the resources available, including SEC and EIA reports that provide greater transparency than press releases put out by corporate PR departments.