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Exxon Mobil paid no federal income tax in 2009

By Joe Romm on April 6, 2010 at 11:02 am

"Exxon Mobil paid no federal income tax in 2009"

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Steve Martin lives!

exxon-mobilThe joke goes, The economy is so bad Exxon Mobil laid off 25 Congressmen.  If only.

Turns out the economy is never really bad for the oil giant, and the last thing they would want to do is cut off support to members of Congress who allow them to pull off the remarkable trick of making $45 billion in profits last year but paying no federal income tax.  Think Progress reports the stunning news, which, sadly, is not a Steve Martin routine:

Last week, Forbes magazine published what the top U.S. corporations paid in taxes last year. “Most egregious,” Forbes notes, is General Electric, which “generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.” Big Oil giant Exxon Mobil, which last year reported a record $45.2 billion profit, paid the most taxes of any corporation, but none of it went to the IRS:

Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings permanently reinvested overseas.

Mother Jones’ Adam Weinstein notes that, despite benefiting from corporate welfare in the U.S., Exxon complains about paying high taxes, claiming that it threatens energy innovation research. Pat Garofalo at the Wonk Room notes that big corporations’ tax shelter practices similar to Exxon’s shift a $100 billion annual tax burden onto U.S. taxpayers. In fact, in 2008, the Government Accountability Office found that “two out of every three United States corporations paid no federal income taxes from 1998 through 2005.”

Media Matters adds:

Even though Exxon doesn’t contribute anything to the federal government, it spends millions of dollars trying to control it.  According to the Center for Responsive Politics, Exxon Mobil spent a whopping $27,430,000 on lobbying in 2009 alone.

Oh, and you’ll be delighted to know that, as the Financial Times reports today “ExxonMobil, the world’s largest international oil company, has agreed to pay the US government $32.2m in a settlement to resolve claims that it knowingly underpaid royalties owed on natural gas produced from federal and native American leases, the justice department said on Monday.”

Someday, ExxonMobilShellChevronConocoPhilips will be one big company making tens of billions of dollars in profit, while paying no federal income taxes and spending millions spreading disinformation aimed at keeping us addicted to their toxic product.

And if this reminds you of an old Steve Martin joke — then you are right.  From SNL in 1978:

You.. can be a millionaire.. and never pay taxes! You can be a millionaire.. and never pay taxes!

You say.. “Steve.. how can I be a millionaire.. and never pay taxes?”

First.. get a million dollars. Now.. you say, “Steve.. what do I say to the tax man when he comes to my door and says, ‘You.. have never paid taxes’?”

Two simple words. Two simple words in the English language: “I forgot!” How many times do we let ourselves get into terrible situations because we don’t say “I forgot”?

Let’s say you’re on trial for armed robbery. You say to the judge, “I forgot armed robbery was illegal.” Let’s suppose he says back to you, “You have committed a foul crime. you have stolen hundreds and thousands of dollars from people at random, and you say, ‘I forgot’?” Two simple words: Excuuuuuse me!!

Well, it’s ain’t armed.  But it is robbery.

UPDATE via Forbes:

Though Exxon’s financial statement’s don’t show any net income tax liability owed to Uncle Sam, a company spokesman insists that once its final tax bill is figured, Exxon will owe a “substantial 2009 tax liability.” How substantial? “That’s not something we’re required to disclose, nor do we.”

UPDATE2 via Mother Jones:

Which leaves the figures in ExxonMobil’s 10-K largely unexplained: Even if the firm overpaid taxes and earned a refund, it still wouldn’t show up as a zero or a positive revenue in cashflow””unless the paid tax liabilities are concealed elsewhere in the report. And it doesn’t explain why ExxonMobil’s figures are so out of wack with its peer corporations, like Wal-Mart, cited in the original story above, or Chevron, which listed $200 million in US income tax on the same line in its 10-K, Forbes reported.

In any case, the original story is wrong in this respect: According to the 10-K, a screenshot of which is provided below, ExxonMobil didn’t have a zero-tax liability in 2009; it was actually owed 26 million by the IRS, against $15.1 billion in foreign taxes owed. As Jeffers says, that may not be the case; but it’s what ExxonMobil told the SEC, its shareholders, and the world. And since the firm refuses to share its actual tax numbers with the public, it’s all we have to go by.

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16 Responses to Exxon Mobil paid no federal income tax in 2009

  1. Herman Leben says:

    Likewise, GE has $84 billion in overseas income parked indefinitely outside the U.S. Untaxed!!!

    ExxonMobil ( XOM – news – people ) paid more income taxes than any other U.S. company last year, some $15 billion, or 47% of pretax earnings. Exxon’s peers Chevron ( CVX – news – people ) and ConocoPhillips ( COP – news – people ) likewise paid out more than half their earnings in income taxes.

    There is a little issue about income tax is paid where the income is earned. I do notice EXXON does report paying taxes in it’s annual report to shareholders.

  2. Chris Dudley says:

    If you steal a gun, isn’t that armed robbery as well? ExxonMobil relies on our military without paying for it at all.

  3. Paul K2 says:

    Herman… welcome to the tax accounting world of oil companies. If an international oil company produces oil overseas, some of the payment for that oil are considered “foreign taxes” and can be used as a credit against taxes owed to the US federal government. Also, consider the case where an overseas oil field is nationalized; the “loss” can be used to offset gains elsewhere. Then add the capital held offshore and not repatriated, and you have more income escaping US taxation.

    I am not an expert in these accounting rules, but essentially, most oil companies rarely pay any significant taxes to the United States Federal government, other than lease fees and royalties on oil and gas produced from federal lands.

    The effective tax rates you quote include these “foreign taxes” and don’t refer to US taxation. The Forbes article carefully skirted this issue to give a very misleading impression.

  4. Steven H says:

    Reading this article, reminds me of the dark age.

  5. Leif says:

    Steve H, #4: Yes and the Church, strike that, Corporations are doing all in their power to perpetuate the dark age.

  6. mike roddy says:

    In their minds, the Federal Government is not giving them enough. This company is run by far right zealots, who detest any oversight from government or citizen groups. A good example is the Valdez spill, when they first reduced and then stalled any payments for 15 years, after many of the victims had died.

    Fossil fuel companies are basically criminal enterprises. Their weaknesses are contempt for their customers and their choice of spokesmen, who (like James Inhofe) would shame a PTA meeting.

    Royal despots hung on for a while in Europe, too, but eventually their personal excesses and character defects manifested themselves in castle meltdowns. People with pitchforks won’t be necessary, as in 1789. Storming the mansions of Exxon managers and stockholders would only reveal a scene of stupidity and trivial consumption, set to bad country music. They will self destruct on their own eventually.

    Let’s put them out of business, with plug in cars and solar thermal (especially since Exxon just paid $31 billion for a natural gas company).

  7. catman306 says:

    If Exxon/Mobile paid no taxes and reported $45 Billion in profits, it reflects in the dividends that stocks in this company pays. The handful of individuals who own a couple of million shares each would really notice the difference in their dividend checks. That’s why Exxon/mobile pays no income tax. Who are the top ten shareholders of Exxon/Mobile?

    Global warming now, worsening later, in exchange for short term financial gain for a handful of tycoons. What a civilization that allows this! What a species!

  8. Leif says:

    catman360, #7: Don’t the CEO and other top management get large stock options on top of their marginal salary?

  9. Anonymous says:

    It’s Alan Jeffers from ExxonMobil.
    I just got off the phone with Chris Helman at Forbes about his story, which incorrectly states we didn’t pay any U.S. federal income taxes in 2009. He said he’s planning to fix it and I’m hoping you’ll do the same.
    It is incorrect to say that ExxonMobil did not pay any U.S. income tax in 2009, In fact, we expect a significant U.S. federal income tax liability for 2009, although our tax return will not be filed until later this year.
    Our tax installments overpaid our 2008 U.S. federal income taxes and we used that excess in part to pay our 2009 estimated taxes.
    The bottom line is that it is not correct to say we did not pay any U.S. federal income tax in 2009.
    Thanks
    Alan

  10. Doug Bostrom says:

    The bottom line is that it is not correct to say we did not pay any U.S. federal income tax in 2009.

    Presumably we’ll be able to find correspondence w/your tax lawyers on a server in Tomsk?

  11. Bob E. says:

    ‘No Taxation Without Representation’ is ingrained into our American psyche. Maybe its time to try a little ‘No Representation Without Taxation’ for these big corps. Being able to shell out $24 million to influence US policy should be a privilege, not a right, and Exxon shouldn’t be able to do it if it doesn’t put any skin into the game in the form of tax dollars.

  12. Jeff Huggins says:

    Dear Alan-Jeffers-From-ExxonMobil (Comment 9), If That’s Really You,

    I’ll ask again: Could you (ExxonMobil) please tell us how much CO2 is generated each year (pick 2008 or 2009 as the example) when customers actually use ExxonMobil products, e.g., when ExxonMobil gasoline is used as fuel in cars, when ExxonMobil jet fuel is used as fuel in jets, and so forth? The total will be fine, thanks. My calculations (based on basic ExxonMobil stats) suggest the number is substantially higher than One Trillion Pounds of CO2 generated each year, from the use of ExxonMobil products alone.

    As I’ve asked before, could you please tell us the figure that ExxonMobil estimates?

    Also, could you please tell us how much CO2 and other GHGs are generated in ExxonMobil’s operations, i.e., production, logistics, refining, distribution, and etc.? The total will be fine.

    In the interest of transparency, ExxonMobil, please do let us know, now thanks! You seem to “pretend” to have a stance of wanting the public to have information and understand things. Why, even today, you have an advertorial on the front page of The New York Times. So, please give us the basic key numbers, thank you.

    And New York Times — yoo hoo, over here! — yes, here!! — could you please ask ExxonMobil — politely, of course — tell them “pretty please” — to give the public the damn information for once!!

    Isn’t it your job, New York Times, to report that sort of information? If not, then what is your job?

    Thank you,

    Jeff

  13. Andrea says:

    I am so glad that I don’t by Exxon gas. I live in the South where everyone has a pick-up truck or an SUV. They just don’t get it here….we have to move to a green energy culture. It ain’t gonna be easy…but if everyone knows that we pay state taxes at the pump but these Oil Companies don’t pay any taxes…they might want to start a revolution….or at least get something smaller to drive.
    This is disgusting!!!

  14. Richard Brenne says:

    Anonymous Alan (#9) -

    When H&R Block gets around to doing Exxon-Mobil’s 2009 tax return could you please tell us how much Exxon-Mobil will be paying in U.S. taxes?

  15. Charlie says:

    @Jeff Huggins

    I don’t really understand what knowing all that information will do? The entire world is driven (for the majority) by fossil fuels, regardless of who provides it. Targeting one company’s contribution is a useless exercise. We need to look at the whole picture of how much ALL cars pollute, ALL jet planes, ALL production, refining, etc. What good is it to single out one company? If Exxon disappeared the next day there would be hundreds of companies, both foreign and American lined up to fill their void.

    The shift in energy sources is going to occur and the irony of it is that once a dependable renewable energy source(s) is/are discovered, it will most likely be the same energy giants that step in and take charge because they have the infrastructure to handle it on a global scale.

  16. Chris Winter says:

    Business writers tell us that disruptive technologies — like energy sources that produce no CO2 — are never introduced by industry leaders. The reason is that the leaders view the new technology as insignificant until it has proven itself in the market. By then it may be too late for the leaders. That’s not a certain outcome, but it is likely.

    Consider the Apple ][, which was rejected out of hand by Hewlett-Packard, where Steve Wozniak worked at the time he developed it.

    Off the top of my head, I suggest the books by C.M. Christensen as references.