Exxon's Record Taxes, Capital and Exploration Spending in Perspective 24 comments
-
Font Size:
-
Print
- TweetThis
Exxon (XOM) has already paid $19.828 billion in income taxes for 2008 (data here), and will probably pay almost $40 billion in income taxes this year (see graph above, income tax data for 1999-2007 taken from Exxon's annual reports).
To put $40 billion of income taxes in perspective, it can be reasonably estimated that Exxon will pay more in income taxes this year (both here and outside the U.S.) than the entire bottom 50% of American individual taxpayers (about 67 million) will pay in income taxes this year.
Using IRS tax data through 2005 (in Table 6, data here), and making reasonable projections for tax payments in 2006, 2007 and 2008, the bottom 50% of taxpayers will pay an estimated $34 billion in income taxes this year, and it will probably be the first time in U.S. history that a single corporation paid more in income taxes than the entire bottom 50% of U.S. taxpayers.
Update 1: Of course, corporations don't actually pay taxes, they collect them, in the form of higher prices for consumers, lower wages for employees and/or lower dividends for shareholders. In other words, people pay all taxes in their roles as consumers, workers and shareholders.
Update 2: Exxon is a global company and operates in the United States, Canada, Europe, Africa, Asia-Pacific, the Middle East, Russia/Caspian region, and South America. In 2005, Exxon earned about 70% of its profit outside the U.S. and paid 70% of its income taxes outside the U.S., and in 2006 Exxon earned 71.4% of its profits outside the U.S. and paid 81% of its taxes outside the U.S. Source: Exxon's annual reports.
Update 3: What gets reported by the media is Exxon's second-quarter record profits of $11.68 billion for a U.S.-based company, without distinction between profits earned in the U.S. and profits earned outside the U.S. Likewise, Congress reacts to the total amount of Exxon's record profits with proposals of "windfall profits taxes," without a distinction between profits earned in the U.S. and profits earned outside the U.S.
Therefore, when it comes to a discussion of Exxon's income taxes, it also makes sense to look at Exxon's total income tax payments of $10.5 billion in the second quarter, or $40 billion for the entire year. Although not all of Exxon's income taxes are paid to the U.S. Treasury and not all of Exxon's profits are earned in the U.S., I think it is still useful to put $40 billion of taxes into perspective by comparing that amount paid by a single corporation to the amount of income taxes paid by the bottom 50% of U.S. taxpayers. In other words, record profits for Exxon = record taxes for Exxon.
With all of the media and Congressional focus on Exxon's record profits in the second quarter, what gets neglected (along with Exxon's record income tax payments) is the record amount of spending by Exxon on "capital and exploration," coming in at $7 billion in the second quarter 2008 (data here), the highest amount ever spent by Exxon in a single quarter.
ExxonMobil increased investments across all business lines to help meet global demand for crude oil, natural gas and finished products. Capital and exploration project spending increased to $7.0 billion in the second quarter, up 38% from last year. For the first half of 2008, spending on capital and exploration projects was $12.5 billion.
If the trend continues, Exxon will spend about $25 billion this year on capital and exploration, the highest amount in history (see top chart above). Where are the media reports on Exxon's "record capital and exploration spending?"
The bottom chart above shows some of Exxon's financial results for the first half of 2008, comparing profits, income taxes paid, and capital and exploration expenditures. Note that Exxon has spent more so far this year on income taxes ($20b) and capital expenditures ($12.5b) combined ($32.50) than it made in profits ($22.5b) this year.
Further, note that Exxon's tax rate so far this year is 47%, based on earnings before tax [EBT] of $42.4b and income tax payments of $19.8b, up from last year's rate through the first half of 42.5%. Why doesn't that significant tax hike for Exxon get reported?
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 24 comments:
Dr. Perry for presenting some "real" facts as opposed to the opinions the so call "financial experts" regularly offer based simply on their biased views of an industry they don't understand.
> jack
Exxon gets huge subsidies and pays significantly below market royalties for oil and gas pumped on federal land in this country. Why shouldn't they be paying market rates comparable to that paid for private lands? The profits are a huge subsidy of this and other similar companies and is paid by other tax payers.
If we want to see lower tax rates for people, corporations need to be paying market rate royalties, stop taking federal subsidies and stop depending on socialist support for their businesses when we and they want market-based economics to work.
Think about it.
The USA does not spend approx. $600 Billion annually on Foreign Oil. The Oil Companies do. To elimnate our dependence on Foreign Oil, Congress should take all of their profits. This would prevent further purchases and our dependence will vanish. Hurrah!
Be careful of what you wish for.
Furthermore, Exxon should be taxed higher; it is making it's profit off of natural resources that don't actually belong to it, but to the people in other countries. We would never let Saudi Aramco drill in the U.S., but we're perfectly happy with Exxon drilling everywhere else in the world, and bitch about how high the taxes it pays to other nations are.
Finally, the negative externalities incurred by Exxon's business strategies and products incur even higher costs to society - environmental damages to our air and water, pollution of rainforests, coastal habitats, and other natural ecosystems, and human rights abuses in Africa.
It's ridiculous that Exxon makes so much money not by actually creating a technology of product that allows the world to move ahead (as oil did, say, 75 years ago) but by stealing natural resources from other peoples in other nations and selling them at inflated prices while putting on a campaign of misinformation to make us all believe that a) we need oil and b) Exxon is doing everything it can to keep oil prices down.
When an oil company spends twice as much on share buybacks as on exploration and production, there is something wrong. Exxon is great for shareholders, but terrible for the world - and it's not paying enough in taxes to make up for it.
industry.bnet.com/ener.../
T. Boone is trying to get funding for the powerlines necessary to get his ambitious project online so to speak. So he's hammering this bit about "America Spends $600 BILLION on Foreign Oil". In reality, The OIL Companies are spending this much to keep up with demand. AMERICA will not enjoy the benefits of reducing dependance on foreign oil, Our Oil companies will enjoy the benefits.
Subsidy - a form of financial assistance paid to a business or economic sector. A subsidy can be used to support businesses that might otherwise fail, or to encourage activities that would otherwise not take place.
Exxon is not receiving a subsidy - just the opposite. This is exactly why liberals such as yourself should stay away from the US pocketbook. You have no understanding how the market works.