You’ve got to give the Center for American Progress (CAP) credit for consistency – the organization has a nearly perfect record in its pronouncements about the tax treatment of the oil and gas industry.
Without exception, they are always wrong.
CAP’s most recent assault on our industry fits the pattern. It’s a mélange of half-truths, deceptive claims, cherry-picked facts, and gross misstatements – all designed to convince lawmakers to raise taxes on the so-called Big Oil firms by wrongly claiming we currently don’t pay our “fair share.” Financial analysis and statistical gamesmanship like this would fail any SEC or corporate audit standard.
Dissembling on tax rates
Consider, for example, CAP’s claims that ExxonMobil paid an effective federal tax rate of 13 percent in 2011.
ExxonMobil’s effective U.S. tax rate for the last several years has been about 32 percent. Anybody can calculate those numbers based on our publicly disclosed financial information. It’s simple math, that’s been verified time and again, most recently in an analysis last year by The New York Times.
Who benefits from government largesse?
CAP has also inaccurately claimed that our industry “has been the largest beneficiary of federal financial support in the energy sector.”
Again, wrong by a country mile.
The Congressional Budget Office reports that the lion’s share of federal tax preferences for energy are aimed at energy efficiency and renewable energy projects, not the fossil fuel industry (see nearby chart).
I’ve explained what seems like more times than I can count that what CAP says are oil industry subsidies and giveaways are anything but. They are simply deductions for the costs of doing business and other tax treatments that are available to businesses across all sectors of the economy.
Unlike a lot of the renewable energy companies reflected in the CBO chart, the government does not write us any checks. On the contrary, the evidence unequivocally shows that we are the ones writing billions of dollars of checks to governments at the federal and state and local level.
Taking liberties with employment numbers
Finally, CAP takes a knock at Big Oil for a slight decline in U.S. employment at companies like ExxonMobil and Chevron.
What, exactly, is their point? Focusing solely on a few companies’ payrolls ignores the hugely important contributions of our industry’s indirect and induced job creation in recent years.
CAP is ignoring the fact that our industry supports nearly 10 million American jobs and this positive impact has grown considerably over the past several years. And they’re ignoring the mammoth capital spending from companies like ExxonMobil – investments that will generate economic activity and tax revenues while positioning us for future success.
A perfect document
All in all, the CAP report is almost a perfect document – perfectly wrong.
Rather than recycle past inaccuracies, the folks at CAP would be well served to get out of Washington, D.C., to visit places like North Dakota, Texas, Pennsylvania, and so many of the other parts of the country reaping strong economic benefits from oil and gas production.
At the end of the day, we believe the evidence belies their fundamental proposition – that government should increase taxes on oil companies. No matter how hard they torture the numbers, the flaws in their case make it easy to pick apart when put under scrutiny.
As citizens and elected leaders consider CAP’s work, we hope that another lesson becomes clear – that such faulty analysis, if acted upon, can carry significant consequences. It’s not just because targeted taxes will be paid by oil company shareholders – millions of whom are public servants and mom and pop investors whose retirement accounts or pension plans hold our shares.
Higher taxes will also threaten investment and the resulting jobs, economic activity, government revenues, and energy security that our industry provides the U.S. economy.
And we believe that’s just wrong, too.