January 31, 2006
Oil Companies Report Record Earnings, Pay Record Taxes
In light of the media frenzy over the record 2005 earnings reported yesterday by Exxon Mobil and renewed calls for federal and state windfall profits taxes aimed at oil companies, the Tax Foundation this morning issued an interesting "Fiscal Fact" report, Large Oil Industry Tax Payments Undercut Case for "Windfall Profits" Tax:
It is important to remember that net income reported on financial statements, is the result of subtracting income-based taxes from corporate gross earnings. Before shareholders receive a return on their investment, the government takes its significant share off the top. During 2005, these three companies paid a combined corporate income tax burden of $44.3 billion on their reported gross earnings. Compared to last year’s combined corporate income taxes of $29.7 billion, their burden for 2005 has increased by 49.2% and follows the overall trend of escalating corporate tax collections in the United States. In addition to corporate income taxes, the same companies paid or remitted over $114.5 billion in other taxes in 2005, including franchise, payroll, property, severance and excise taxes.
Corporate Income Tax
Corporate Tax Rate
Corporate Tax Per Employee
Update: Wall Street Editorial here.
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The number in the lowest rightmost cell "Total/Corporate Tax Per Employee" seems to be the sum of the three numbers above it. However, the sum of three ratios is not a sensible number. I assume that the number should be divided by three.
Posted by: Robert Schwartz | Jan 31, 2006 6:19:19 PM
Robert Schwartz correctly observes that the chart overstates the Total/Corporate Tax Per Employee. The same error occurs elsewhere in a chart that appears at the end of the release itself.
The Foundation computes the Corporate Income Tax Per Share of stock of each oil company. It then adds these three figures to determine the Total/Corporate Income Per Share for all companies. This clear overstates the tax burden per share and misleads the reader. To the extent the tax burden per share is a meaningful measurement, the average figure should be computed by taking the total tax paid by all three companies and dividing that figure by the number of shares outstanding for all three companies.
Posted by: Richard Winchester | Jan 31, 2006 8:13:37 PM
The bottom row of the original table contained a typographical error, as noted in the above comments. It has now been corrected, and can be viewed here:
Posted by: Andrew | Feb 1, 2006 11:51:57 AM