Exxon Mobil’s Tax Rate Drops To 13 Percent, After Making 35 Percent More Profits On Rising Gas Prices In 2011
"Exxon Mobil’s Tax Rate Drops To 13 Percent, After Making 35 Percent More Profits On Rising Gas Prices In 2011"
Exxon Mobil, the most profitable of the big five oil companies, made $41.1 billion in profits last year. Although Exxon made 35 percent more profits since 2010, its estimated effective tax rate actually dropped. Citizens for Tax Justice reported Exxon paid only 17.6 percent taxes in 2010, lower than the average American, and a Reuters analysis using the same criteria estimates that Exxon will pay only 13 percent in effective taxes for 2011. Exxon paid zero taxes to the federal government in 2009.
Reuters compares the 45 percent tax rate Exxon claims it pays to the effective rate estimated by Citizens for Tax Justice — a rate that’s even lower than Mitt Romney’s tax rate. Chevron, which made $26.9 billion profit in 2011, paid 19 percent:
Citizens for Tax Justice considers U.S. profits and U.S. taxes paid only. By that measure, Exxon Mobil paid 13 percent of its U.S. income in taxes after deductions and benefits in 2011, according to a Reuters calculation of securities filings.
It is a far cry from the 35 percent top corporate tax rate.
Still, the three-year average for telecom companies is 8 percent; for information technology services companies, it is 2.5 percent, according to CTJ.
Chevron CEO John Watson recently claimed “We’re the highest taxed industry that I’m aware of” while the American Petroleum Institute has claimed the industry pays a tax rate at more than 40 percent. But as Reuters explains, the oil industry uses a different methodology to claim it pays an artificially higher tax rate to the public. The industry “lumps together U.S. and foreign taxes. It includes taxes that are deferred and thus not paid yet. U.S. companies must pay taxes on profits earned abroad, but they can defer these taxes until they bring the cash into the country.” The big five use this tactic of hoarding cash oversees in tax havens, cutting their tax rates drastically. Exxon uses at least 20 tax shelters. These tax loopholes permit Exxon to pay a rate in-line with Mitt Romney, who’s also notorious for tax dodging.