The scandal plagued corporation Chesapeake Energy has been dealing with the fallout of news that its CEO used company backed assets to secure more than $1 billion in personal loans. The company has also been charged with conspiring to hold down land prices in Michigan, opening it up to an anti-trust investigation.
Meanwhile, the company has paid just a 1 percent tax rate over the last two decades, despite making billions of dollars in profits, as Bloomberg News noted:
Chesapeake Energy Corp. (CHK) made $5.5 billion in pretax profits since its founding more than two decades ago. So far, the second-largest U.S. natural-gas producer has paid income taxes on almost none of it.Chesapeake paid $53 million over its 23-year history, or about 1 percent of the cumulative pretax profits during that period, data compiled by Bloomberg show. That’s less than half of Chief Executive Officer Aubrey McClendon’s compensation, for example, in 2008 alone.
And Chesapeake isn’t alone amongst domestic oil and gas producers: “Range Resources Corp. paid income taxes of about 0.4 percent of pretax income over the past decade, the data show. Southwestern Energy Co. (SWN) paid 2.1 percent and EQT Corp. (EQT) paid 5.3 percent.”
These companies are able to get away with paying such low rates because of tax preferences handed out to the oil and gas industries. Overall, the U.S. spends $4 billion annually on tax giveaways to these already hugely profitable companies.
The U.S. has already seen effective corporate tax rates plunge to a 40 year low, even as corporate profits hit record highs, thanks to the plethora of giveaways and loopholes in the corporate tax code. In the last four years, 26 major corporations made billions in profits while paying no federal corporate income tax. That Chesapeake can make billions while paying next to nothing is simply indicative of the extent of the problem.