Exxon Cites Gas Tax — Paid By Consumers — In Attempt To Prove Its Taxes Are High

Last week, on the same day that it announced an $11 billion first quarter profit, oil giant Exxon Mobil publicly whined about the renewed push in Congress to cut the $4 billion in subsidies that go to oil companies every year. “Over the last week as earnings season has approached, the Democratic Party leadership again talked about removing what they call $4 billion in oil industry subsidies,” Exxon’s vice president for public and government affairs said. “But what they really mean is that they want to increase our taxes by taking away long-standing deductions for our industry.”

Of course, this is pretty rich coming from a company that has consistently broken and then rebroken the record for yearly profits, making it the most profitable company in the Fortune 500, while simultaneously paying far below the statutory corporate income tax rate due to various loopholes, deductions, and the use of offshore tax havens. In fact, in 2009, Exxon paid no income taxes to the U.S. whatsoever.

But in a desperate bid to convince everyone that it should continue receiving billions in taxpayer-funded largesse, Exxon is out with new claims about its level of taxation, saying that it actually pays more taxes in the U.S. than it earns here in profits:

In the first months of this year, Exxon (XOM, Fortune 500) says it paid $3.1 billion in taxes in the United States — more than even the $2.6 billion in profit it made selling oil and gas. To get to that number, the company includes the federal and state gasoline taxes that the company collects from drivers and passes on to government coffers. It also includes payroll taxes the company pays on behalf of its employees.

The problem here is that Exxon is counting as part of its tax burden a tax that it simply does not pay. The gas tax — which is 18.4 cents per gallon, plus whatever individual states decide to levy — is paid entirely by consumers. Unless Exxon wants us to believe that it is knocking 18.4 cents (or more) off of every gallon it sells, and turning that money over to the government, this number is absolute hokum. (Many economists also consider the employer side of the payroll tax as being paid by employees, in the form of lower wages, making Exxon’s number even worse.)

The fact of the matter is that the government is spending billions each year to support an industry that clearly doesn’t need it and that already takes advantage of the byzantine U.S. corporate tax code to lower its tax payment far below the rate that’s on the books. Instead of accepting that the rationale for oil subsidies has vanished, Big Oil is concocting bizarre numbers to justify continuing taxpayer giveaways to a hugely profitable industry.

For more information, read today’s Progress Report, “The Showdown Over Big Oil.”