|Does Big Oil Pay Its Share of Taxes? |
March 15, 2012
For the moment let’s ignore that it’s not objectively clear what Big Oil’s share is. And ignore the serious problems with any corporate tax to begin with.
Let’s just focus on if and what they pay in corporate taxes, and how subsidies fit in here.
“… if you hear somebody claim that the solution to raising more government revenue is to tax corporations rather than people, you can dismiss him as an ignoramus.”
– Kurt Schuler ( bio)
First, a tax break is not a subsidy. If I was about to take $100 from you and instead only take $80, I have not done you a service, you do not owe me anything for my supposed goodwill. All that has happened is that I have harmed you slightly less than I otherwise would have. This is a non-trivial point.
So let’s take a look at what Big Oil and Big Gas pay in corporate taxes.
Big Oil, Bigger Taxes – WSJ.com: “President Obama says he wants to end subsidies for what he calls “the fuel of the past,” but lucky for him oil and gas will be the fuels of the future too. His budget-deficit blowout would be so much worse without Big Oil, because the truth is that this industry is subsidizing the government.
Much, much worse, actually. The federal Energy Information Administration reports that the industry paid some $35.7 billion in corporate income taxes in 2009, the latest year for which data are available. That alone is about 10% of non-defense discretionary spending—and it would cover a lot of Solyndras. That figure also doesn’t count excise taxes, state taxes and rents, royalties, fees and bonus payments. All told, the government rakes in $86 million from oil and gas every day—far more than from any other business.
Exxon Mobil, the world’s largest oil and gas company, says that in the five years prior to 2010 it paid about $59 billion in total U.S. taxes, while it earned . . . $40.5 billion domestically. Another way of putting it is that for every dollar of net U.S. profits between 2006 and 2010, the company incurred $1.45 in taxes. Exxon’s 2010 tax bill was three times larger than its domestic profits. The company can stay in business because it operates globally and earned a total net income after tax of $30.5 billion in 2010 on revenues of $370.1 billion.
For comparison, nuclear power comes in at minus-99.5%, wind at minus-163.8% and solar thermal at minus-244.7%—and that’s before the 2009 Obama-Pelosi stimulus. In other words, the taxpayer loses more the more each of these power sources produces.”