Oil Companies Profit While You Foot The Bill

June 1, 2011

From 2008 – 2010 “ExxonMobil reported $9,910 million in pretax U.S. profits. But it enjoyed so many tax subsidies that its federal income tax bill was only $39 million, a tax rate of only 0.4 percent.” Yes, you read that right — a tax rate of only 0.4%, says Citizens for Tax Justice (PDF). I don’t know how high your tax rate was on your income in past years, but I am guessing it was a lot higher than 0.4%, right?

“… the discrepancy between Exxon Mobil’s rates and those of most American breadwinners. The company’s effective rate of 17.6 percent is nearly 16 percent below the average individual federal tax rate, which according to the Congressional Budget Office was 20.4 percent as of 2007. Individuals in the highest quintile pay an average tax rate just over 25 percent in the United States. Exxon Mobil, meanwhile, paid approximately the same effective tax rate as Americans in the fourth income quintile which includes Americans earning from $62,000 to $100,000 a year” says Think Progress.

Oil company profits have been a de-facto dinner table conversation for a few years now, what with the biggest few companies reaping wildly huge profits. In the 1st quarter of 2011 alone, Exxon/Mobil made $11 billion, Shell made $6.9 billion, BP made $7.1 billion, Chevron made $6.2 billion, and ConocoPhilips made $3.0 billion. That’s a lot of profit, even if the oil companies had to pay their fare share of taxes on it like the rest of us do. However, not only do they not pay their fare share but the government gives them about $4 billion in annual tax subsidies. Yes, our government, i.e. you and I, pay for the oil companies to get a $4 billion tax break when they are showing billions in profits. You and I effectively reduce their taxable income by $4 billion dollars each and every year. When was the last time the government, or your fellow tax-paying neighbor, handed you boat loads of money and told you they were going to help you pay your taxes, even as you were reporting record profits year after year?

Never, that’s when.

While the figures are sketchy and incredibly difficult to pin down (the oil companies like it that way), the fact remains that the average taxpayer in the United States pays a larger percentage of their income in taxes than a company making billions in profits every year. Not income, mind you. Billions in profits. And when the oil companies attempt to explain how much they pay in taxes, they forget to leave out the taxes that, wait for it, you and I pay at the pump that they have to forward on to the state and federal governments. They actually include those figures as tax dollars they themselves are paying, but that’s not them paying taxes at all — that’s us.

Angry yet?

In a time when our economy is in a recession and budget cuts are being implemented by federal, state, and local governments, you would think that it would be high time to cut the billions in subsidies that have been handed out to oil companies year after year in a time of record profits. At least, that would be the sensible thing to do, right? To be fiscally responsible? Well, at least one side of the political aisle (and even a few Dems) doesn’t seem think so, because as they are busy trying to get cuts to Medicare, Medicaid, education, and Social Security passed, the GOP doesn’t think the oil companies should pay their fare share to help out.

“Last month the House GOP voted unanimously to protect taxpayer-funded subsidies to big oil. All of the belt tightening, you see, has to be done by Medicaid and Medicare recipients, not by those poor beleaguered oil company execs.”

Think what you want about the policies of Republicans vs. Democrats, but something here stinks. Too often I hear consumers complain about the price of gas or the tax per gallon they have to pay at the pump, but the real scam here is that the oil companies are making out like bandits, not the local gas station owner or your local town government. Whether you vote blue or vote red, no company making billions and billions of dollars in profits should be receiving free taxpayer money from our government. I don’t have an issue with them making money; I have an issue with all of us having to then send them even more. They have plenty of their own money to support drilling or oil exploration and should be paying their fair share in taxes like the rest of us. Before we go cutting services to the needy, the elderly, or the education of our children, I think we need to look at where our tax dollars are going and demand they be appropriated to places they are needed and not to billion dollar corporations with money to burn.

Photo By brownpau

Filed in: Oil • Tags: , , ,
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Comments (4)

  1. Suzie Easter says:

    They do pay their fair share. Our government spends and wastes too much. Why should any of us have to pay for our bloated out-of-control government? Our representatives should be held responsible and should have to pay up from their personal assets. What is the government doing with the taxes it collects per gallon of gas? There is nothing to show for it. The government is the biggest fat cat, Ponsi schemist, gambling organization, and group of control freaks of all time.

    • David says:

      Show me, factually, that they pay their fair share, and I will remove the post. Will be waiting.

      • Berry Muhl says:

        What’s “their fair share”?

        Why, exactly, does any corporation owe the government ANYTHING?

        The government has at times taken far more than the oil companies’ profits; the height of this was the mid-90s. If you can show me exactly what the government has done to deserve five times what the corporate profits were (1995), I’ll happily agree that they’re not paying “their fair share,” but frankly, I don’t see anything “fair” about demanding taxes at all. The government isn’t putting its own money at risk to invest in new fields. It’s just sitting back, raking in the dough, and expanding its own bureaucracy to justify it.

        http://taxfoundation.org/blog/oil-industry-profits-vs-gasoline-taxes

        • David Quilty says:

          You’re right, we should continue giving them billions in tax breaks. Makes total sense. And, who needs taxes? I mean… come on, right?

          If you don’t like paying taxes . . .

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          – Don’t use the court system.

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          – Don’t use the US Post Office, send all your letters via FedEx or UPS.

          – Don’t ask for a farm subsidy for not growing crops.

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          – Don’t buy a sports franchise and ask the taxpayers to build your stadium.

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          – Don’t expect the military to defend your country.

          Contributed by BuzzFlash Readers:

          – Don’t visit national parks or hike in national forests.

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          – Don’t look at or relay a weather report.

          – Don’t look at a NASA generated picture.

          – Don’t expect a unit of measure like a gallon of gas to be a full gallon.

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          – Don’t be the Minority Senate Leader Named Trent Lott and expect American taxpayers to subsidize the building of private industry cruiseliner ships in your home state.

          – Don’t accept government money to help develop a product which you then personally patent or copyright and sell for your own profit.

          – Don’t use the services of a doctor who is licensed through the state.

          – Don’t expect research into medical problems such as cancer, heart disease, diabetes, aging, prostrate, menopause, etc.

          – Don’t use the public library.

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          June 24, 2002 Updates

          – Don’t expect the government to protect the copyright for the works you create.

          – Don’t move to any other developed nation, because the taxes are higher in all
          the others, except South Africa.

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          – Don’t expect any workplace safety standards, labor laws, or minimum wage.

          – Don’t use any gasoline, oil, or natural gas that was discovered by the USGS.

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          – Don’t expect zoning laws.

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          – Don’t expect highway signs.

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          – Don’t expect to OWN anything, like your house, car, etc. (the govt. keeps track
          of titles).

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          July 26, 2002 Updates

          – Don’t expect to receive a cheap land lease on Federal lands, then mine or cut the forest for your profit with no repayment to the landlord (we the people).

          – Don’t expect to have uniform building codes.

          – Don’t expect to go to buildings and high rises that have been reviewed and inspected during construction to ensure it was built to current building codes.

          – Don’t expect to eat in restaurants that have been inspected to ensure cleanliness and the safe preparation of food.

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          – Don’t try to adopt a child through your county or state government.

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          http://www.buzzflash.com/perspectives/taxes.html

          Ridiculous.