seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion
back to cake * Font Size: * Print * Email 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!
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.
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. This would give us a balanced federal budget every year, too.
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? As someone above so rightly pointed out, businesses don't pay taxes.
Taxes are paid on net income, which is the profit left after costs incurred in the manufacturing process (eg, higher crude oil prices; 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. 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.
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.
Do you know the difference between "income tax expense" and the actual payments to the IRS are? 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. If a PhD can't figure out how much a corporation actually pays in taxes, how is the average voter supposed to make informed decisions?
You need to distinguish between book taxes and cash 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. 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 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.
My Website Feb 07 01:44 AM 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 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.
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 also bet that it is lower than the average tax rate paid by the lower 50% of the population!
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...
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. remind me, which federal agency spends $30+ billion on bike trails. 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. 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!"
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? 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.
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! I don't belie...
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