I’ve talked a lot on this blog about proposed changes to the U.S. federal tax code, and how punitive taxes would undermine American job creation and energy security. I’ve also tried to dispel the myth that oil and gas companies receive special treatment when it comes to taxes.
In considering these specific issues, it’s also worth recalling a general point: ExxonMobil already pays a very, very large amount in taxes. I know that statement might not generate much sympathy from anyone. But at the same time, it is important to put our tax contribution into perspective in any debate about new punitive tax measures.
From 2005 to 2009, our U.S. taxes, including all forms of taxation, totaled $63 billion. In that five-year period, we paid $19 billion more to the U.S. government in taxes than we earned.
Many Americans may not fully realize how significant our tax contribution is and what it means to the American economy. A few comparisons might help.
The tax deposits ExxonMobil paid to the U.S. Treasury from 2005 to 2009 could cover the entire fiscal year 2011 proposed budget for the Department of Education, with $13 billion to spare. Alternatively, it equals the combined fiscal year 2011 proposed budgets for the following agencies:
• Department of Interior ($12 billion)
• Department of Justice ($24.1 billion)
• Environmental Protection Agency ($10 billion)
• Department of Commerce ($8.9 billion)
• And the National Science Foundation ($7.4 billion)
In 2009 alone, ExxonMobil paid $7.7 billion in U.S. taxes. That could have comfortably funded the entire FBI that year. Alternatively, our $7.7 billion could pay for the Department of Justice’s Organized Crime and Drug Enforcement Task Force for 10 years. Or, our tax bill would have funded the Bureau of Land Management, U.S. Geological Survey, the Bureau of Reclamation, the Fish and Wildlife Service, and the entire National Park Service in 2009.
I realize these aren’t exactly apples-to-apples comparisons. But no matter how you slice it, the oil and gas industry generates a lot of revenue for the government. The oil and gas industry is one of the country’s leading sources of jobs and economic growth – not to mention tax revenue. But there are limits to how much you can tax any industry. Piling on additional industry taxes that put us at a disadvantage with foreign competitors threatens to slow job creation, hamper economic growth, and decrease energy production. How is that good policy?
Jon Werberg wrote:
Ken,
Can you please breakdown Exxon’s taxes by type – corporate income, excise, payroll, etc..
Do you include royalties in those figures?
Ken Cohen wrote:
Jon, thanks for your question. The royalties we pay to the U.S. (and state) government are in addition to the tax numbers mentioned in the post, and have amounted to billions of dollars over many years.
A further breakdown of ExxonMobil’s taxes is detailed on page A-54 of our 2010 Proxy Statement, which can be found online. http://www.sec.gov/Archives/edgar/data/34088/000119312510082074/ddef14a.htm
Jeff Hoopes wrote:
Ken,
I would appreciate a little more information on the $7.3 billion figure provided in this post. Am I safe in assuming that this is the amount listed on line 31 of Exxon-Mobil’s consolidated 1120 tax return? My understanding is that the tax figures listed on the firm’s 10-K can be substantially different than those listed on the firm’s 1120, because of the difference between financial accounting according to GAAP, and tax accounting as governed by the IRC. I was just wondering what this number actually is.
Secondly, if Exxon-Mobil is interested in portraying itself as a responsible taxpayer (which I assume it is, as that is the purpose of this post), has Exxon considered simply disclosing more tax information, such as page 1 of its 1120? While the entire return would surely contain proprietary information that Exxon would not want public, page 1 would serve only to give the public the strong impression that Exxon is paying a lot in taxes, and would bolster Exxon’s image as a taxpayer.