Back in February, after Exxon Mobil reported a record profit for 2007, I got tired of all the demagoguery about Exxon's "obscene profits" and posted about their obscene tax bill. Exxon paid $30 billion in taxes in 2007 — that's a tax rate of more than 40%.
So yesterday, Exxon reported a record quarterly profit, and every news story in every medium has trumpeted that in tones ranging from barely neutral to strongly disapproving. Only a few have mentioned the tax side of the story:
The $14.8 billion earned during the third-quarter broke the Irving, Texas-based company’s own record last quarter of $11.7 billion.
Exxon said net income jumped nearly 58% to $2.86 a share in the three month period from July through September. That compares with $9.41 billion, or $1.70 a share, during the same period a year ago.
…
Profits soared while crude oil prices hit record highs in the summer, pushing gasoline prices above $4 a gallon in most areas of the U.S.
ExxonMobil’s fourth-quarter profits are expected to fall in tandem with the coinciding decline in the price of oil. A barrel of crude oil was selling for about $65 on Thursday, down from a high of $147 in July.
But record earnings translated to record taxes.
ExxonMobil, which operates within a 43.3% tax rate, paid $11.3 billion in income taxes, $9.3 billion in sales taxes and $11.85 billion in other taxes. That comes to $32.51 billion in taxes during the current quarter.
Notice that Exxon's profit grew 58% from the third quarter last year, but it's tax bill for the quarter is bigger than the total for all of last year — and more than twice the quarterly profit! Now, I'm pretty certain that's caused by a significant lumpiness in tax payments, not an actual quadrupling of their taxes. But their tax rate continues to grow, causing their taxes to become more "obscene" faster than their profits.
I noted in February that U.S. oil companies have paid taxes at an average rate of 45% since 1977, meaning that:
… the investors who financed all the exploration, drilling, processing, refining, and distribution (and the concomitant job creation) have had to settle for just over half the profit that their risk-taking created and made possible — and then they had to pay personal income taxes on that.
To the economically illiterate (and the envy-driven), profits are obscene. To me, 40+% taxes are obscene.
