Taxation Hero: ExxonMobil Pays $3 in Taxes for Every $1 in Profit
It’s earnings season and America’s major energy companies once again face a barrage of criticism over their profits, coupled with suggestions they don’t pay enough in taxes. For example, our friends at the Center for American Progress cry, “Big 5 Oil Companies Going for the Gold; Second-Quarter Earnings Race Ahead, Boosted by Tax Breaks.” CAP advocates increasing taxes on large energy companies.
In a recent book, New America Foundation’s Steve Coll suggests there’s something almost unpatriotic with the profits earned by America’s energy companies. For example, in the last sentence of his book he contrasts the fortunes of the energy giant ExxonMobil with that of the United States.
“From the day of the Mobil merger closing [in 1999] until the day of the S&P downgrade [of U.S. debt], the net cash flow of the United States—receipts minus expenditures—was approximately negative $5.7 trillion. ExxonMobil’s net cash flow from operations and asset sales during the same period was a positive $493 billion.”
Now, perhaps it’s an interesting intellectual exercise to compare receipts and expenditures of a government with that of a private enterprise. But additional data overlooked by Coll, CAP, and other critics of America’s energy majors can help round out the picture a bit.
Economist Mark Perry has developed something of a cottage industry examining how much individual firms and industries pay in taxes anytime someone in the White House or on Capitol Hill insists a company or industry pay “its fair share.” I asked him if he could determine ExxonMobil’s tax bill over the period of time Coll discusses. Perry sent me the following: