Saturday, August 2, 2008

ExxonMobil and Taxes

A Los Angeles Times editorial yesterday ("Give Exxon a Break") noted that,

Exxon already faces a stiff tax bill -- nearly 50% of its taxable income went to the government in the most recent quarter.

The specific effective income tax rate ExxonMobil paid for Q2 was 49%, according to p. 5 of the company's earnings press release PDF. A commenter on Matthew Yglesias's post on this ("The Good Times Roll") on his Atlantic blog was skeptical that Exxon paid this much in taxes and asked how the math worked out. After looking at the company's income statement (on p.8 of that earnings press release), I was curious, so I called the company's investor relations department to find out. The I.R. representative didn't know the answer offhand, but called me back with the answer after an hour or so. Here's how the math works out:

The numbers below are in millions of dollars and come from p.8 of the company's press release PDF.

The "income before income taxes" number [22,206], includes post-tax income from Exxon's equity companies, so you have to add the taxes those companies paid [888] to that number. You also have to add that 888 to the main income tax number, 10,526. So here's the arithmetic:

(10,526 + 888) / (22,206 + 888) = .494 or 49%.

Left unsaid by the Los Angeles Times editorial is that ExxonMobil pays other taxes in addition to income taxes. P.8 of the earnings press release notes that the company paid $32.36 billion in total taxes last quarter, including sales and other taxes.


Dennis Mangan said...

Just think how much better our economy would be if the feds weren't taking 50 cents of every dollar of profits - then of course taxing income and dividends and sales too. The Founding Fathers started a revolution over a lot less.

DaveinHackensack said...

The Founding Fathers (perhaps with the exception of Hamilton) would have a difficult time recognizing this country today.

Anonymous said...

Hmmm. What is XOM doing wrong? Most corporations pay no taxes. Maybe it's time for them to hire some new accountants.