Carpe Diem

The truth about all those ‘subsidies’ for ‘Big Oil’

Do a Google search for the term “subsidies for oil companies” and you’ll get more than 600,000 results.  Try a search for “subsidies for Big Oil” and you’ll get almost 700,000 results.  The term “tax breaks for Big Oil” has almost half a million results. Then do a Google search for “tax breaks for green energy” and you’ll only get about 29,000 results.  Based on the volume of Internet search results, you might think that oil companies, especially “BIg Oil,” are raking in billions of dollars in direct federal subsidies taxpayer payments every year. But you’d be wrong.

The reality is that oil companies, especially Big Oil (Exxon, BP, Shell, etc.), really don’t get any federal subsidies, if that term means “getting money to do something,” as Harold Hamm, CEO of Continential Resources reminded Congress in September when he testified that, ”Some call the expensing of ordinary business expenses a “subsidy.” Now my recollection of what a subsidy means is when you are given money to do something. I guess when I drilled 17 dry holes in a row I missed that pay window. No one sent me a check.”

That quote from Harold Hamm was featured in a Forbes article yesterday by David Blackmon titled “Oil & Gas Tax Provisions Are Not Subsidies For ‘Big Oil’” which I think is the best article I’ve ever read on this topic, here’s a slice:

The truth is that the oil and gas industry receives the same kinds of tax treatments that every other manufacturing or extractive industry receives in the federal tax code.  There is nothing uncommon or out of the mainstream of tax treatments about any of the provisions that have been repeatedly proposed for repeal.

1. A great example of just how inaccurate this depiction is applies to Percentage Depletion, which has been a feature of the tax code since 1913.  Basically, Percentage Depletion is the oil and gas industry’s version of a depreciation deduction for its main asset, which is the oil and natural gas in the ground, commonly known as its reserves. Every industry of any kind is allowed a depreciation deduction on its assets under the U.S. Tax Code, but, far from being a “subsidy” for “big oil”, this tax treatment was in fact repealed for all integrated oil companies, i.e., ExxonMobil, Shell, BP, etc., in 1975, and is today available only to independent producers and royalty owners. So repeal of this extremely long-standing, completely common tax treatment would have no effect on “big oil” at all, and would in fact hit small producers and royalty owners harder than anyone else.

2. Another great example of the specious mischaracterization of these tax treatments is the Manufacturer’s Tax Deduction, more commonly referred to as Section 199. The Section 199 provision was enacted by congress in 2004 as a means of encouraging manufacturers to relocate overseas jobs to the U.S., and is in no way specific to or limited to the oil and gas industry. In fact, the oil & gas industry’s ability to take advantage of this provision has already been singled out for limitation – in 2008, Congress reduced the industry’s deduction under this provision to 2/3rds of what other manufacturing industries are allowed to deduct.

3. The tax code contains a couple of credits related to the oil and gas industry – the Enhanced Oil Recovery (EOR) Tax Credit, and the Marginal Well Tax Credit. Far from being “subsidies” to “big oil,” these tax credits are used almost exclusively by small to mid-size independent producers who tend to become the operators of marginal oil and gas fields as they age and are divested by the larger companies. The EOR credit was implemented in 1990, and the Marginal Well Credit was signed into law by President Bill Clinton in 1994.

4. Finally, let’s talk about Intangible Drilling Costs (IDCs), another feature of the federal tax code that will enjoy its 100th birthday in 2013. Basically, IDCs are the costs incurred by the oil and gas industry in the drilling of its wells. Since drilling wells is the only means of finding oil and natural gas, IDCs essentially amount to what any other industry would be able to deduct as a part of its cost of goods sold, a concept of accounting and tax law as old as the tax code itself.

Independent producers and royalty owners are allowed an election to either a) expense these costs in the year they are incurred, or b) amortize them over a 5-year period. Again, most media reports commonly characterize this as a “subsidy” for “big oil”, as does the Obama Administration. The truth is that “big oil” – the ExxonMobils, Chevrons, Shells and BPs of the world – benefit much less from this tax treatment, it having been severely limited to them by congress in 1986, and again in 1992. And the truth also is that IDCs are not a “subsidy” to anyone engaged in the oil and gas business.

Bottom line: Despite the Administration’s rhetoric that has been so widely repeated in the press, the tax treatments in question are not “subsidies” that are in any way outside of the mainstream of tax treatments commonly available to all U.S. industries. Rather than being mostly a benefit to “big oil,” the repeal of these and other oil and gas industry-related tax provisions would mainly impact smaller independent producers and royalty owners. Such repeal would serve no legitimate public policy purpose, other than to unfairly discriminate via the tax code against one of the nation’s most productive – albeit easily demonized – manufacturing industries.

147 thoughts on “The truth about all those ‘subsidies’ for ‘Big Oil’

  1. Blackmon’s article can be found here: http://www.forbes.com/sites/davidblackmon/2013/01/02/oil-gas-tax-provisions-are-not-subsidies-for-big-oil/

    OTOH, a former CEO of a major oil company said just last year, “in the face of sustained high oil prices it was not an issue – for the large companies – of needing the subsidies to lure us into looking and producing more oil.” found at http://www.whitehouse.gov/blog/2012/03/28/it-s-time-end-taxpayer-subsidies-big-oil

  2. Who could have foreseen such huge misunderstandings with the tax code, and associated regulation, being a mere 5.6 million words long?

    • You have to have rules, because there is always someone, somewhere who is going to cheat.

      Did you know that XOM STILL has NOT paid the people in Alaska who sufered from the Valdez disaster? And there’s no rule on the books that would force them to have paid in a timely manner.

      • Which rules? Does it really take 5.6 million words? If it does, is it reasonable to expect people to know the effects? Or was the purpose of 5.6 million words to enable people to lie about who pays taxes and how much?

        • >”Which rules?”

          Well, we started with the 2 moral laws, 1) to obey God with all our heart, mind and strength and 2) to love our neighbors as ourselves. That wasn’t quite specific enough so we were given the 10 Commandments. Then if you search the web you’ll find that they had to explain what some of those commands meant–so they ended up with 613. In my apartment building we have sets of rules that exceed even the 613, then there’s the city ordinances, etc..

          >Does it really take 5.6 million words?

          As I noted, obviously not enough because Exxcon STILL hasn’t paid for the valdez.

          > If it does, is it reasonable to expect people to know the effects?

          You and I, no. Tax lawyers, yes.

          >Or was the purpose of 5.6 million words to enable people to lie about who pays taxes and how much?

          That’s why there are tax lawyers on both sides and if it was a lie, the other side would catch it and expose it.

          • obviously not enough because Exxcon STILL hasn’t paid for the valdez.

            Are you talking about the tax code or tort and criminal law? Because the post and my comments are about the tax code. Can you tell me specifically what part of the tax code you are citing or do you simply have an ax to grind about the Exxon Valdez spill?

            Tax lawyers, yes.

            HAHAHAHAHAHAHA!!!

            Can you name a single person, lawyer or otherwise, who knows the entire tax code and all it’s side effects? Of course not. It’s impossible.

            It is unreasonable to expect anyone to understand a 5.6 million word tax code, much less the effects on the hundreds of millions of people who react to it.

            The tax code is written by and for politicians in order to bamboozle the tax payer and to keep them divided, particularly those who think it’s there are “sides” rather than a powerful corrupt polical class and everyone else.

            That’s why there are tax lawyers on both sides and if it was a lie, the other side would catch it and expose it.

            Having a complicated tax code obviously hurts tax payers, but benefits poltiicians. When an ordinary citizen makes mistakes on his tax form, he is fined and/or jailed. Care to comment on what happened to Tim Geitner and all the other tax cheats in government?

          • >Can you name a single person, lawyer or otherwise, who knows the entire tax code and all it’s side effects?

            Not required. That’s both sides have _teams_ of lawyers.

            >The tax code is written by and for politicians in order to bamboozle the tax payer

            Prove it.

            >When an ordinary citizen makes mistakes on his tax form, he is fined and/or jailed.

            Name them.

          • both sides

            What “sides” are you talking about?

            _teams_ of lawyers

            All right, find me a _team_ of lawyers who understands all 5.6 million words of the tax code, as well as all the side effects.

            Prove it.

            Tim Geithner didn’t pay his taxes. Nothing happened to him. In fact, 41 White House aides own back taxes and haven’t paid them. Try not paying taxes and having it reported in every national newspaper and no action taken against you.

            For more proof, consider that in 2012 government consumed $6.2 trillion dollars, whereas total GDP was $15 trillion. In other words, for every dollar of income in the US in 2012, government took $0.41, leaving less than 2/3rds to those who actaully earned that money. In addition to this, 7 of the 10 richest counties in the US are DC suburbs.

            Name them.

            Are you really claiming no one goes to jail or is fined for mistakes made during tax filing? In case you think that, you can read this to see that Geithner, a politically connected bureaucrat, was treated differently, i.e., not gotten into legal trouble, but David Parker did for doing the exact same thing. His defense was that Geithner did it. The court’s response was essentially “You’re not Tim Geithner”. More reading and links at the link.

          • >What “sides” are you talking about?

            The IRS has one team of lawyers and the companies have their team of lawyers.

            >All right, find me a _team_ of lawyers who understands all 5.6 million words of the tax code, as well as all the side effects.

            If the tax question at hand has to do with the valuation of inventory, then why doesn’t have to worry about the code that deals with depreciation, advertising, fuel costs, etc..

            >>The tax code is written by and for politicians in order to bamboozle the tax payer
            >Prove it.

            Still waiting.

            Re: the LAT news story, do you always believe everything you read?

          • >>Name them.
            >Are you really claiming no one goes to jail or is fined for mistakes made during tax filing?

            Ah, so you can’t name them after all.

        • If you’d click on the (undated, so it may be newer than the last I heard) link it says that the fund has been established and that the period to file a claim has passed.

          • >the distributions have all been made to all qualified,

            The way the web page was worded I got the impression that not all of the monies had been disbursed. I also noted that since the web page was undated I have no way of knowing if it is newer than the last I heard. It could have been put within the last year or so, for instance.

            Let’s assume that your understanding of it is correct and more up-to-date than mine, then mine was outdated and is no longer the case.

            BTW, thank you for your polite tone in your post. It is a pleasure to deal with someone of some intelligence.

          • Is this the only example of you engaging in discourse about something you know nothing about or can we assume there are others.

          • >>If you’d click on the (undated, so it may be newer than the last I heard) link it says that the fund has been established and that the period to file a claim has passed.

            >Is this the only example of you engaging in discourse about something you know nothing about or can we assume there are others.

            Only a blithering idiot would assume in the first place and secondly would assume that outdated = nothing.

          • David C: “You’d have to see their tax return that they filed with the IRS. Now since it has been claimed that they didn’t pay anything to the IRS, they could easily have shown that to be false by showing the line on their tax return that says how much they owed. The fact that they have not speaks volumes.

            Wait a minute. Didn’t you state earlier that the party making the claim has the burden of proof? Why do you now suggest XOM should prove that claim wrong? Is your earlier statement no longer operative?

            [Exxon Mobil] “They are a multi-national corp. Just because they pay taxes in other countries that doesn’t mean that the pay income taxes HERE.

            That’s the second time you’ve mentioned XOM not paying any US income taxes. Is there a point you would like to make about that? Why not just come out with it?

            The whole question is about INCOME taxes, not all the other stuff.

            No, YOUR whole question is about income taxes. Everyone else understands the subject of the original post because, unlike you, they have read it.

            If you wish to accuse XOM – or any other company, for that matter – of tax evasion, just put your evidence up here and get on with it. After all, the burden of proof is on you, isn’t it. It’s pointless to talk about clever accounts and the other drivel you seem to like unless there’s a point you will eventually make.

            Give it a shot, Davie.

          • > Why do you now suggest XOM should prove that claim wrong?

            Could, not should.

            >Give it a shot, Davie.

            Anytime ronnie.

          • >YOUR whole question is about income taxes.

            I realize that this site isn’t set up for you to easily foolow the flow of the conversation. Briefly, it went like this: subsidies–>taxes–>income taxes (earliest mention I found: PeterK | January 3, 2013 at 9:41 pm.) The reason for the conversation flowing from taxes in general to income tax was easy to see: every multi-national pays taxes overseas, it is irrelevant how much was paid to say, Nigeria, when they can deduct it from the income tax returns they’d file here.

          • The way the web page was worded I got the impression that not all of the monies had been disbursed. I also noted that since the web page was undated I have no way of knowing if it is newer than the last I heard. It could have been put within the last year or so, for instance.

            Writes David C. as he backpedals furiously.

          • Could, not should.

            There’s no need for XOM to respond to every leftist whiner that complains that they make too much money and use the tax code to their advantage so as to avoid US income taxes.

          • The reason for the conversation flowing from taxes in general to income tax was easy to see:

            It’s easy for YOU to see because it seems to be a hot button issue for you, but you haven’t explained why.

      • David C.

        You have to have rules, because there is always someone, somewhere who is going to cheat.

        Hmm. I guess that makes sense. Without rules there could be no concept of rule breaking.

        And of course at 5.6 million words of tax code, it’s nearly impossible to cheat. Just a few million more, and cheating on taxes will be something we can only read about in history books .

  3. larry-

    actually, no. the taxes on oil are MUCH higher than those in any other industry.

    i doubt there is a major corporation in the US that pays more taxes then XOM.

    they pay sales based taxes and duties that other industries do not face.

    for the 2011 year, those 2 items were about $73 billion.

    they then paid another $31bn in income taxes on $73bn in income, which, at 41%, is 600 bp over the maximum US corporate tax rate.

    all in all, they paid over $100bn in taxes in 2011 on their business.

    revenues were $486bn. XOm spent $266bn buying oil for resale. they spent another 40bn on extraction.

    just taking out those 2 items (which would comprise cost of goods sold in a manufacturing business) we get a gross profit of $180bn on which they then paid $104 bn in tax, a whopping 58% of gross profits.

    i doubt you could find a major5 US company not in the oil and gas business that pays anything even close to that either as a percentage of gross profits or in absolute dollars.

    political claims that these companies are somehow getting subsidies and avoiding tax are pure populist pandering and wildly untrue.

    http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=8435925-293284-296671&type=sect&dcn=0001193125-12-078102

    i suggest reading the XOM 10k. it lays out in absolutely conclusive fashion what outrageous liars these politicians are.

    no one pays more tax than they do.

      • so they pay almost 1/2 their net income in taxes?

        is that true?

        It’s all in the 10k, Larry. Give it a read.

        Oh that’s right. I forgot…

          • this is what I was looking at from Morgs reference:

            Income before income taxes
            2011 2010 2009
            Income: $73,257 $ 52,959 $34,777
            Income taxes $42,206 $ 31,398 $19,658

          • re: interpret it

            just looking at those numbers (which I realize is not the whole story)…

            it appears that Exxon is paying close to 1/2 in taxes on their final adjust income.

            I looked up-paper to their listed expenses and deductions and saw nothing that stood out as a loophole.

            I’d be the first to admit that I’m not a frequent reader of these 10K docs… so I’m probably not good are getting out of them what others might and I’m perfectly willing to listen to those that can and do.

            Morg proffered it.. I did read it.. it appears that Exxon is paying substantial taxes on their adjust income.

            tell me more.

          • They are a multi-national corp. Just because they pay taxes in other countries that doesn’t mean that the pay income taxes HERE. Reading a 10K or annual report isn’t enough. You need to know where and how they came up with those numbers. If you read business magazines like Forbes and Business Week for decades you’ll find all sorts of stories about how you can quite legitimately “cook the books”. In other case, they’ll show you how someone has cooked the books and screwed people and banks.

          • Okay. Then how could one verify the claim that they pay less taxes (or more) (or none) than other US businesses?

            this looks like one of those data swamp situations where one side says they have no subsidies or tax breaks and the other side says they do.

            Perry has provided some interesting excerpts from the Forbes article yesterday by David Blackmon titled “Oil & Gas Tax Provisions Are Not Subsidies For ‘Big Oil’”

            I realize this is a surrogate speaking for the industry but I see no real point-by-point rebuttals.

            It seems reasonable to me that any industry is allowed to deduct the expenses associated with operating their business.

            the most unfair business taxes (in my view) are those levied on gross revenue – not net.

            but again, I’ve yet to see specific examples of how the oil & gas industry is treated preferentially in the tax code other than the ones cited in the article for smaller operators.

          • >Then how could one verify the claim that they pay less taxes (or more) (or none) than other US businesses?

            You’d have to see their tax return that they filed with the IRS. Now since it has been claimed that they didn’t pay anything to the IRS, they could easily have shown that to be false by showing the line on their tax return that says how much they owed. The fact that they have not speaks volumes.

          • david-

            that’s a completely bogus argument.

            so, if you drill for oil, process it, and sell it overseas you owe tax here? on what basis? they are getting CREAMED on overseas taxes.

            their tax rate is far higher than what they would pay here. XOM would LOVE to pay US taxes instead. but that’s not how it works. they are forced to pay taxes in the countries they do business and those taxes are nasty and punitive.

            what is it you propose, that they be double taxed?

            and what about the other $70+ billion they pay in sales taxes and in duties?

            that’s mostly going to the US. it dwarfs their income taxes. you will not find that companies in other industries pay such tax.

            your whole argument is pure hearsay, nonsense, and an avoidance of the facts.

            claiming they “cooked the books” with no evidence demonstrates nothing apart from your ignorance and gullibility.

            the IRS has teams that work at XOM and are there day in day out. you think this has not been scrutinized over and over?

            riiiiight.

            XOM pays over $100bn a year in various taxes.

            if this is them getting special deals, then why is that multiples higher as a % of gross profit than any other major US company?

            one of the key indicators of tax avoidance/evasion is paying little tax.

            why else would you do it?

            if this is cooking the books for tax evasion and avoidance, then XOM must have the stupidest tax lawyers and accountants ever to walk the earth as they are managing to pay far MORE both in absolute dollars and %’s than anyone else.

            that seems unlikely.

            you need to take your own advice about interpreting things. you are just parroting the empty claims of populists who do not understand accounting and tax.

            xom is getting gouged, not getting special deals.

          • >so, if you drill for oil, process it, and sell it overseas you owe tax here? on what basis? they are getting CREAMED on overseas taxes.

            And yet its okay (i.e., curently this is the way the law works) for individual workers who work overseas to have to pay taxes here? Secondly, you’ve assumed that all the activities took place overseas. I don’t make any assumptions.

            >their tax rate is far higher than what they would pay here.

            That’s not true either; a common argument for lower our tax rates is that they are higher here than elsewhere (unless, of course, the one’s who say that have been lying to us!).

            >and what about the other $70+ billion they pay in sales taxes and in duties?

            The whole question is about INCOME taxes, not all the other stuff.

            > you will not find that companies in other industries pay such tax.

            Hmmm, and yet when I was in business if we bought things that were subject to sales taxes we paid them. Where are you getting your misguided info from?

            >your whole argument is pure hearsay, nonsense, and an avoidance of the facts.

            BS; that’s why I posted links that directly undercut some of the claims that were made on this blog, such as:

            “Blackmon’s article can be found here: http://www.forbes.com/sites/davidblackmon/2013/01/02/oil-gas-tax-provisions-are-not-subsidies-for-big-oil/

            OTOH, a former CEO of a major oil company said just last year, “in the face of sustained high oil prices it was not an issue – for the large companies – of needing the subsidies to lure us into looking and producing more oil.” found at http://www.whitehouse.gov/blog/2012/03/28/it-s-time-end-taxpayer-subsidies-big-oil

            >claiming they “cooked the books” with no evidence demonstrates nothing apart from your ignorance and gullibility.

            Nope, its a common phrase used in Forbes and Business Week that I picked up from reading them over several decades. Your claim indictates your naivete–nothing wrong with that, just don’t go spouting off about things you know nothing about.

            >the IRS has teams that work at XOM and are there day in day out.

            Actually, it’s ONE team of 35 people.

            >you think this has not been scrutinized over and over?

            Hmmm, have you ever had to play accounting, etc. games on your own boss? Are these the same geniuses who didn’t catch Bernie Madoff? Implicitly you are assuming that they are aat least relatively, infallibe at their own job, and not in the back pocket (the infamous revolving door from gov’t back to industry).

            >then why is that multiples higher as a % of gross profit than any other major US company?

            Where’s the proof?

            >one of the key indicators of tax avoidance/evasion is paying little tax.

            Actually, a sneakier way is to pay some tax, just not all of it. Secondly, just because a company records their payment of various import/export duites, custom fees, real estate taxes, etc., that doesn’t mean that they are paying INCOME taxes.

            > you are just parroting the empty claims of populists who do not understand accounting and tax.

            Actually, most of what I’ve said here came from business school classes, experience in business managament and reading Forbes and Business Week over several decades.

          • “And yet its okay (i.e., curently this is the way the law works) for individual workers who work overseas to have to pay taxes here? Secondly, you’ve assumed that all the activities took place overseas. I don’t make any assumptions.”

            no it;’s not OK. i think it’s a stupid law and one the rest of the world largely does not follow. talk about making assumptions. why would you assume i thought that was OK?

            second, that’s a much too simplistic view. a US citizen that lives and works overseas and pays taxes there generally winds up either paying taxes in the host country and being able to deduct them from us tax or paying US taxes and none in the local country. they are not generally double taxed.

            the resy of your comment is easily demolished with your won admonitions. read the 10k. it’s all there. most of xom’s business takes place overseas. most of their revenue comes from buying oil overseas. 5 minute of reading would show you this. you need not assume anyhting.

            “The whole question is about INCOME taxes, not all the other stuff.”

            no, it’s not. the question was about “do oil company’s get special tax breaks” the answer is NO. they do not. but they do face taxes that other industries do not. that IS the issue. they are in a position of relative disadvantage on tax, not advantage. they get no special treatment that say, manufacturing would not, but they do pay additional taxes.

            you then claim “i read forbes” like that makes you some sort of expert. it does not. largely, it makes you a stooge. i make my living by knowing that. you, it appears, do not.

            you ignore the facts and cite unsubstantiated claims.

            that money article you linked did not even have sourcing.

            puh-leez.

            you keep trying to shift the debate to income taxes only because you have realized that if you look at overall tax, your whole argument disintegrates.

            but even so, you have no argument.

            they paid 46% in income tax. the top us rate is 35%.

            so you tell me, if they are “paying a little tax” and hiding/shifting income to avoid paying more, why are they doing it in countries with higher tax rates than the US?

            wouldn’t that be incredibly stupid?

            who would shift income to somewhere with 55% tax to duck 35% tax here?

            clearly, they would be better off shifting income INTO not out of the US.

            the whole argument you are making makes no sense, you just seem unable to see that.

            find me any other S+P company that pays 46% income taxes.

            XOM would love to pay all their income taxes in the US and only pay 35%. that would save them 6-7bn a year and increase reported profits by around 18%.

            they would LOVE to do that.

          • >why would you assume i thought that was OK?

            Have you ever heard of a rhetorical question?

            >a US citizen that lives and works overseas and pays taxes there generally winds up either paying taxes in the host country and being able to deduct them from us tax or paying US taxes and none in the local country. they are not generally double taxed.

            Assumes facts not in evidence, and yet as I understand it, the above would also apply to businesses that operate here and overseas.

            >the resy of your comment is easily demolished with your won admonitions. read the 10k. it’s all there.

            No, you have to compare and contrast–i.e., 10k and the Annual Report. You also have to understand how those numbers were derived.

            >most of xom’s business takes place overseas.

            And recall, that it was I who noted that they were a multi-national corp which you, at best, had implied I wasn’t aware of.

            >“The whole question is about INCOME taxes, not all the other stuff.”
            >no, it’s not. the question was about “do oil company’s get special tax breaks”

            The amount they paid in INCOME taxes is the sub-topic under “special tax breaks’–I guess, at best, that you haven’t been keeping up with the flow of the conversation in this blog.

            >they do face taxes that other industries do not. that IS the issue.

            Name them.

            >you then claim “i read forbes” like that makes you some sort of expert. it does not. largely, it makes you a stooge.

            1) I never claimed to be an expert.
            2) You are basically admitting that Forbes, Business Weekl and WSJ are tools of propaganda that give their readers their talking points when defening their POV. The editorials might work that way, but the news articles do not.

            > i make my living by knowing that. you, it appears, do not.

            Two claims with no supporting evidence.

            >that money article you linked did not even have sourcing.

            You persist in clipping out what I presented. Why?
            Secondly, in trying to find it I came up empty.

            >you keep trying to shift the debate to income taxes only because you have realized that if you look at overall tax, your whole argument disintegrates.

            No, the claim was made that they paid NO INCOME taxes. Secondly, since all companies face real estate taxes it is nonsense to include them when the question is whether or not the oil companies get some special advantage.

            >they paid 46% in income tax. the top us rate is 35%.

            Gee, that makes them awfully stupid, eh?

            > why are they doing it in countries with higher tax rates than the US?

            And yet the multi-nationals claim that our rates are higher than everyone else–what is this, the convenient lie of the moment? Note also that Deferred Corporate Earnings (i.e., sheltered overseas) in 201, amounted to $1.3 trillion–if our rates were lower than where the money is at, then they’d be bringing it home.

            ” some have argued that U.S. corporate tax rates unduly burden U.S. companies by pointing to the country’s top statutory tax rate, which is 35 percent. For example, a recent Wall Street Journal editorial calling for corporate tax cuts noted that this is the second highest top statutory tax rate among developed countries.[2] While true, this gives the false impression that the corporate tax burden is greater here than in other developed countries. Because the U.S. tax code offers so many deductions, credits, and other mechanisms by which corporations can reduce their taxes, the actual percentage of profits that U.S. corporations pay in taxes — or what analysts refer to as their effective tax rate — is not high, compared to other developed countries.” from http://www.cbpp.org/cms/?fa=view&id=784

            Now did you catch the game they played with your head in that?

            >the whole argument you are making makes no sense, you just seem unable to see that.

            That’s you, not me.

            >find me any other S+P company that pays 46% income taxes.

            I didn’t make that claim, so I have no burden of proof in the matter.

            >XOM would love to pay all their income taxes in the US and only pay 35%.

            The above quote shoots in the foot on that one.

          • David
            Yep, that’s what it says. Now, interpret it.

            It says they pay about half their income in taxes.

            What was your long answer?

          • >>Short answer: no they did NOT.
            >David
            >“Yep, that’s what it says. Now, interpret it.”
            >It says they pay about half their income in taxes.
            >What was your long answer?

            Read the posts that followed.

          • Read the posts that followed.

            Nothing in your posts that followed refuted the claim that XOM paid about halt their income in taxes. I won’t waste time on a vague reference like that again.

            And remember, the burden of proof is yours. Your short answer was “no they didn’t”.

        • The question is NOT about how much taxes ExxonMobil has paid. The question is about how much they paid in INCOME TAXES. One a personal level, lets say that someone made a million dollars last year, but paid no income tax and yet points to the real estate taxes and sales taxes that they paid. You could easily respond to that, by noting that anyone who owns RE and buys things pays those taxes.

          • david-

            you do realize that is is possible to lose money in one market and make money in another, right?

            http://www.exxonmobilperspectives.com/2011/05/02/exxonmobil-u-s-taxes-and-u-s-earnings/

            your source is as ignorant of business as it is factually wrong.

            XOM paid $1.6bn in us income taxes in 2010.

            they paid 9.8bn in overall us taxes, a number that exceeded their US operating income.

            “And over the past five years, we incurred a total U.S. tax expense of almost $59 billion, which was $18 billion more than we earned from our U.S. operations during the same period.”

            you are just not understanding the fact that XOM does most of it’s business overseas.

            they would LOVE to be paying only US taxes. but the countries where they actually produce and source most of their oil tax they hell out of them for the privilege.

            it’s the nature of the resource business.

            so just what is it you want to do? double tax them?

            if i have 2 stores, one in the US and one in mexico, why should the US get taxes on my mexico store? they are not providing infrastructure, law and order, police, nada.

            so lay it out for me, why should they get taxes?

            XOM is already paying more in tax than they make in profit in the US and more in tax as a % of world gross marin than anyone i know of.

            what’s enough for you?

            and what are you going to do? how do you get the guys whose land the oil lies under (like nigeria) to allow drilling and pumping without taxing.

            your whole argument is so divorced from reality it’s hard to know where to start.

            if XOM are such cunning and effective tax avoiders then why do they pay so much tax?

            i can see pointing at guys like google or GE and saying “they deliberately shift profits to low tax jurisdictions” but XOM is shifting them to HIGH tax jurisdictions.

            you really think that’s by choice?

            wake up and smell what you are shoveling.

          • >you do realize that is is possible to lose money in one market and make money in another, right?

            A good accountant can have you lose money in the market where you’d pay high taxes and make money where you’d have low taxes.

            >your source is as ignorant of business as it is factually wrong.

            Which source are you talking about? I’ve shown a number of them. Plus, where’s the proof that it is “ignorant of business”?

            >XOM paid $1.6bn in us income taxes in 2010.

            If true (and you do know that your source is a fluff piece put out by XOM, right?) that works out to be ab’t 15%–about the same as you know who. Meanwhile, take a gander at your pay stub and see how much was taken out.

            >you are just not understanding the fact that XOM does most of it’s business overseas.

            Actually, it was I who pointed out (at 6:18 this morning) that they are a multi-national corp.

            >they would LOVE to be paying only US taxes.

            Yeah, right. And yet all the other companies are telling us that your rates are higher than the face elsewhere. BTW, when they pay taxes overseas, they get to declare those as an expense on our tax forms.

            >so lay it out for me, why should they get taxes?

            Same reason American workers overseas have to pay taxes on the income they earn overseas.

            >XOM is already paying more in tax than they make in profit in the US and more in tax as a % of world gross marin than anyone i know of.

            In INCOME tax

            > how do you get the guys whose land the oil lies under (like nigeria) to allow drilling and pumping without taxing.

            Answered above.

            >your whole argument is so divorced from reality it’s hard to know where to start.

            Start by not lying and look at each fact and deal with it–like I’ve done.

            >if XOM are such cunning and effective tax avoiders then why do they pay so much tax?

            Already dealt with. Sales taxes, real estate taxes, etc. are NOT INCOME TAXES!

            >but XOM is shifting them to HIGH tax jurisdictions.

            Where’s the proof? Are you really saying that the accountants at XOM are so dumb as to not copy what other multi-national corps do on a routine basis?

            >wake up and smell what you are shoveling.

            That’s you, not me.

      • David

        Quite true. Now for the other half: “but not a cent went to the IRS for income taxes. ” from

        Hasn’t that tired old claim been worn out by now? talk about cherry picking!

        In 2009 XOM had no taxable US income, so paid no US income taxes.

        • How many courses in accounting have you taken? Any accountant worth their salt can show you how to allocate costs in places that have high taxes and profits in areas that have low taxes. That’s how companies have been able to hide trillions of dollars overseas. Take a look at the 10K filing and then look at the annual report. By the numbers you’d think you were looking at two different companies! In a finance class the prof noted that there’s only one real number on the balance sheet that he had just given us: the date! Everything else was an expresison of value. On inventory for example one would think you’d go by the value of the first piece that was put into inventory, that’s called FIFO (first in, first out). An alternative way of valuing inventory is LIFO (last in, first out). When you do the latter you artificially raise your costs of doing business and lower your profits. There’s an old accounting “joke” about the accountant who was being interviewed for the job at the company, was asked “what is 2+2?” and the accountant responded with “What do you want it to be?” which can be quite true. A good accountant can take the books of a profitable company and make it look like they took a bath and get a tax credit.

          • “That’s how companies have been able to hide trillions of dollars overseas. ”
            no the money isn’t hidden at all. we know where it is. what has happened is that the accountants have taken advantage of the laws as to what can and can not be done.
            US companies have billions of dollars of profits held overseas, but won’t bring them back to these shores because they would have to pay a 35% tax rate on those profits. This is one reason why Microsoft bought Skype. they used foreign held profits.
            Everyone even liberals who call for paying more taxes or for higher taxes do everything they can to reduce the tax bite. Why else would George Lucas sell his company to Disney just before the end of 2012? oh! yeah a lower capital gains tax rate. Warren Buffet may complain about his paying a lower amount of income taxes than his secretary but he set up his compensation so that he wouldn’t. and it is all legal.
            Want to end the argument over taxes and who pays how much then consider implementing a flat tax or the fair tax (fairtax.org)

          • >>“That’s how companies have been able to hide trillions of dollars overseas. ”
            >no the money isn’t hidden at all. we know where it is. what has happened is that the accountants have taken advantage of the laws as to what can and can not be done.

            Ah, too simple for ya. It was HIDDEN from TAXATION. Secoondly, we do NOT know how much is hidden overseas–it is only an estimate.

          • >Want to end the argument over taxes and who pays how much then consider implementing a flat tax or the fair tax (fairtax.org)

            And raise our tax rates?!? Are you crazy? And do you really think that the rich are going to stand by and not keep ANY of their fav deductions while yours hit the trash bin?

          • several including training from forensic accountants and some very notorious short sellers.

            i do this for a living david. nice try, but your claims fail a basic sanity test.

            if XOM were cunningly avoiding taxes, then the taxes they paid were low.

            nobody games the system to pay MORE tax.

            they are paying way over the US max.

            they would much rather have the profits taxes here than wherever they ARE paying taxes.

            the rest of your comment is just accounting 101. any value is somewhat subjective and can be treated in different ways.

            you have pointing to nothing at all that is specific to an oil company.

            a company that makes staplers can use LIFO too.

            i run a hedge fund. i too can use LIFO when determining which lots were sold if it suits my tax purposes (and it often does).

            if XOM is hiding/sheltering all this money, they are doing a terrible job.

            why would you shelter money where taxes are high if you had the choice to pay in the US where they are lower?

            stop and think about what you are claiming and then look at the actual taxes paid.

            XOM would pay 10′s of billions less in tax if they were only taxed in the US.

            they would LOVE that.

            they are not screwing the US, they are getting screwed by the countries in which they do business. you are blaming the victim.

          • >i do this for a living david. nice try, but your claims fail a basic sanity test.

            And yet you claimed “if XOM makes $100 in gross profit then pays 50% tax on that …” I’m really glad that you aren’t doing my taxes! And you lie ab’t me repeatedly–do you know God says will happen to liars?

            >the rest of your comment is just accounting 101. any value is somewhat subjective and can be treated in different ways.

            That’s what I’ve been saying! And yet it is above what you claim to do for a living.

            >you have pointing to nothing at all that is specific to an oil company.

            Didn’t claim anything specific either.

            >a company that makes staplers can use LIFO too.

            Quite true.

            >i run a hedge fund.

            Assumes facts without evidence.

            >why would you shelter money where taxes are high if you had the choice to pay in the US where they are lower?

            You keep making that assumption. It runs contrary to what multi-nationals claim–which is why they hide their money overseas. If you claim had a factual foundatuion that money would be here. It isn’t–that fact alone speaks much louder than you empty claims.

            >they are not screwing the US, they are getting screwed by the countries in which they do business.

            again you make a claim without any supporting evidence and secondly, they can deduct those costs if they brought the monies home and paid taxes on their profits. By your line of reasoning, they apparently are enjoying the screw job that they are getting.

          • Davie boy,

            I just have to ask. Do you by any chance have a cousin named Max?

            You seem to have the same incredible ability to tell everybody how smart you are while proving to them that you have no idea what you’re talking about.

            No one is fooled by this chest-puffing bullshit. You are fast losing any credibility you have might have here, if that matters to you.

            Get a grip.

          • morganovich: “>i run a hedge fund.

            David C.: “Assumes facts without evidence.

            Do you mean he must prove he runs a hedge fund?

    • Another thought to add to this is that they have employees in the U.S. They pay taxes, also. Exxon and other “big oil” companies pay well. Their employees are also going to be paying hefty taxes, also.

      It’s a shame that the 2004 legislation to encourage overseas businesses to bring business back here was taken away for oil companies. Producing more oil here means that we don’t pay tariffs for oil and we are not subject to OPEC’s maneuvering and the instability of other countries’ governments. This means lower costs to do business for everyone else and lower costs for the consumer in every facet. This increases the ability of businesses to hire employees and people to purchase “stuff” thereby increasing demand and increasing jobs. All that equals indirect tax increases.

      Furthermore, specifically related to direct taxes, bringing more oil production here means more jobs (= more taxes), increased revenue to property owners (= more taxes), less taxes paid for the same amount of oil produced here instead of overseas paid to other countries (= more U.S. taxes).

  4. Please state the taxes that Exxon and the next 4 major oil companies paid each year for the last 5 years. Remember you are under oath and your answer will be broadcast on the internet with your name attached

        • Wrong. Innocence and non-wrong doing are assumed. If you want to claim that oil companies aren’t “pay their fair share” or claim they are manipulating the political process, the burden of proof lies with the accuser.

          • >Wrong. Innocence and non-wrong doing are assumed.

            That may be–or it is being read in. But, as long as a claim isn’t made there is no burden of proof.

            I’ve taken a couple of courses in logic and worked on a computer prgram that could read text and convert it into the kinds of symbols you see when an argument is being analyzed for logic.

          • The claim that many make, as pointed out in the blog post itself (did you bother to read it?), is that oil companies receive special consideration. They don’t.

            And good for you for taking “a couple of courses in logic”. You should work hard(er) to improve yourself. I have a masters in applied math from a university ranked in the top 10 for applied math, and have worked as a software developer for over 10 years. When you grow up and become an adult and finally understand the “couple” of logic courses you’ve taken and the symbols used by computer programs, maybe you’ll understand logic well enough, and have reading comprehension skills good enough, to keep in mind the entire argument being made, and not just focusing on one or two comments. That way you won’t get lost and flail around ignorantly saying “as long as a claim isn’t made” when there clearly was a claim made.

          • Perhapos when you get older and wiser and have decades of experience under your belt, you will have by then learned to recognize when each claim has been explicitly made vs being readinto a text (maybe a couple of courses in exegesis, eh?), maybe become a published author in a scholarly, refereed journal in which the editor points out that the refs said that your article was of “high quality and hads a cogent tone”. Maybe, but I doubt it. Little minds perfer to insult vs do any real work.

            Anyone who makes a claim, has the burden of proof. A question is NOT a claim.

          • maybe become a published author in a scholarly, refereed journal in which the editor points out that the refs said that your article was of “high quality and hads a cogent tone”.

            Wow! Is that YOU big boy? What have you published? I’d love to read it.

            Little minds perfer to insult vs do any real work.

            LOL Do you mean insults like this?

            ““Perhapos when you get older and wiser and have decades of experience under your belt, you will have by then learned to recognize when each claim has been explicitly made vs being readinto a text”

            Or this?

            Ah, too simple for ya. It was HIDDEN from TAXATION

            Or this?

            How many courses in accounting have you taken? Any accountant worth their salt can show you how to …

          • >Do you mean insults like this?

            Note that ronnie couldn’t show the context of the insults that were hurled my way.

          • Note that ronnie couldn’t show the context of the insults that were hurled my way.

            But it was your claim that little minds prefer to insult. It seemed sufficient to point out that your use of insults made you the poster child for that notion.

          • Note that ronnie couldn’t show the context of the insults that were hurled my way.

            But it was your assertion that little minds prefer to insult. It seemed sufficient to point out that your use of insults showed you to be the poster child for your own claim.

          • > It seemed sufficient to point out that your use of insults showed you to be the poster child for your own claim.

            What goes around, comes around, eh?

            You on the other hand by only attacking me, while leaving out those who dished it out in the first place, show that you are a Pharasaical hypocrite.

          • re: ” You on the other hand by only attacking me, while leaving out those who dished it out in the first place”

            that’s the way that Ron and a few others who frequent this place… play on a fairly regular basis….par for the course here.

          • What goes around, comes around, eh?

            Meaningless.

            You on the other hand by only attacking me, while leaving out those who dished it out in the first place, show that you are a Pharasaical hypocrite.

            Pointing out your hypocricy is not hypocritical. You might accuse me of being biased or unfair in singling you out, but no one but you made a claim about insults being the product of a little mind while hurling insults.

            Try to keep track.

      • I would like to begin a discussion about subsides to the large oil companies. In order to do that I would like to start with a few “givens” that we agree on. If we can not start from a common set of basic “givens” it is of no value to have a conversation. If we can agree on a record of tax values of the top 5 oil companies for the last 5 tax years I would look forward to a substantive talk about subsides.

        • “I would look forward to a substantive talk about subsides.”

          then I suggest you read and reread the original posting above which explains why BO does not get any “subsides”

          • >reread the original posting above which explains why BO does not get any “subsides”

            You are asuming that it told you the whole truth and nothing but the truth. I’ve learned to wait for the other shoe to fall.

          • “ou are asuming that it told you the whole truth and nothing but the truth.” nope not at all however it has provided more information than you have. and in some cases reconfirms the information I was aware.

          • >nope not at all however it has provided more information than you have.

            And yet it wasn’t I who has told lies on this blog. And I have given you information that you were not aware of.

    • if you had follow Dr. Perry at his old blog Carpe Diem you would have seen this
      “ExxonMobil reported its first quarter 2011 earnings today, which came in at $10.65 billion, an increase of 69% from the same quarter last year when it earned $6.3 billion. While the huge earnings amount captured all of the media attention, several other items received much less attention (see chart above):

      1. ExxonMobil paid $8 billion in income taxes to various governments in the first quarter, which is about $22 million in income taxes each day, or almost $1 million each hour. ”
      http://mjperry.blogspot.com/2011/04/exxonmobil-paid-almost-1m-per-hr-in.html
      or this article from another blog
      “ExxonMobil ($27.3 billion), Chevron ($17.4 billion) and ConocoPhillips ($10.6 billion) occupy the top three spots in Forbes’ income-tax-paying ranking. Occidental Petroleum comes in at No. 18 ($2.9 billion).”
      http://energytomorrow.org/blog/forbes-big-oil-biggest-taxpayers?#/type/all
      “Taxation Hero’: ExxonMobil has paid more than $1 trillion in taxes since 1999, which is 3x its profits over that period”
      http://www.aei-ideas.org/2012/08/taxation-hero-exxonmobil-has-paid-more-than-1-trillion-in-taxes-since-1999-three-times-its-profits/

      • >ExxonMobil has paid more than $1 trillion in taxes since 1999, which is 3x its profits over that period

        Think about that for awhile. You make x amount of money and yet 3x in taxes. How long would you remain in business at that rate?

        • sir your responses remind me of the ol Brer Rabbit story about the tar baby. you don’t want to have a discussion you just want an argument. so far you’ve not provided anything meaningful to the discussion

          ttfn

          • > so far you’ve not provided anything meaningful to the discussion

            I’ve exposed several lies and distortions so far. So there’s another one.

          • “I’ve exposed several lies and distortions so far. So there’s another one.”
            in what way? I expressed an opinion. now since you are a rapid fire responder what lies and/or distortions have you exposed and what objective verifiable sources have you provided to support your opinions. Yes opinions since without supporting information that is all you’ve done. stated an opinion. you’re more than welcome to express an opinion but it would be nice to see something that supports.

          • >>“I’ve exposed several lies and distortions so far. So there’s another one.”
            >in what way? I expressed an opinion.

            Stated as a fact, which it was not.

            >what lies and/or distortions have you exposed

            At 9:58 Ken claimed: “When an ordinary citizen makes mistakes on his tax form, he is fined and/or jailed.”

            I reqquested that he name them–he couldn’t do it and instead went off on a tangent with allegations.

            >what objective verifiable sources have you provided to support your opinions.

            Partly to anser the above as well:

            “>no one pays more tax than they do.

            Quite true. Now for the other half: “but not a cent went to the IRS for income taxes. ” from http://money.cnn.com/galleries/2010/news/1004/gallery.top_5_tax_bills/2.html

            For more details, (as one’s eye’s glaze over!), see http://www.politifact.com/truth-o-meter/statements/2010/dec/10/bernie-s/bernie-sanders-filibuster-exxon-mobil/

            >Yes opinions since without supporting information that is all you’ve done.

            That’s yet another lie as just shown.

            >but it would be nice to see something that supports.

            Doine that already.

          • >apparently you do not understand that profit is the money left over after paying operating costs and taxes.

            Nope; I understand it quite well; you failed to prove that I did not.

            Gross Income
            -COGS
            =Gross Profit
            -GSAE
            =EBIT
            -Income tax
            =Net Income

        • what a ridiculous answer.

          for someone who claims to have taken so many accounting classes, you sure seem unable to read an income statement.

          if XOM makes $100 in gross profit then pays 50% tax on that due to duties and sales taxes (that are largely exclusive to oil) and then spends another 10% on opex, they drop $40 to the operating line.

          if they then pay 42% of that in income tax, they drop $23 to the net line.

          this is pretty much accurate for them for 2011.

          thus, they make $23 in income and pay $50+ $17 = $67 in taxes. that’s 2.9X the tax paid as net income earned.

          this does not mean they lost money.

          i’m starting to get the sense that you are one of these guys with a very high opinion to knowledge ratio.

          the fact that you even made the claim above seems to cast some real doubt on your claims about accounting knowledge. out interns who are generally college undergrads would not make a mistake like that.

          you seem desperate to move the goalposts to income tax instead of “subsidy” which, if you go back and read the title of the post was clearly the topic and then make claims about your vast accounting knowledge while repeatedly making incredibly basic errors.

          you describe paying income tax rates in the mid 40′s as “ducking tax” when such rates are far above US rates and then try to ignore the vast other taxes paid as if somehow they do not count when trying to decide if a company is getting gouged or getting free stuff.

          i suggest that you try to actually acquire the knowledge you profess to have before opining so vehemently based on incomprehension.

          • >for someone who claims to have taken so many accounting classes, you sure seem unable to read an income statement.

            I can read financial statements (not just income statements) like a book. I was asked by one buyer to analyze a company that he was looking at buying. I ripped their sheets to ribbons.

            >if XOM makes $100 in gross profit then pays 50% tax on that due to duties and sales taxes

            They wouldn’t. They subtract operating and managerial expenses from the gross and end up with EBIT.

            .i’m starting to get the sense that you are one of these guys with a very high opinion to knowledge ratio.

            You think that way, I don’t.

            .the fact that you even made the claim above seems to cast some real doubt on your claims about accounting knowledge. out interns who are generally college undergrads would not make a mistake like that.

            And yet you putzed as I showed.

            >you seem desperate to move the goalposts to income tax instead of “subsidy” which, if you go back and read the title of the post was clearly the topic

            All conversattions wander a bit. As I very carefully noted the claim was made that XOM didn’t pay a penny in income tax. If you click on the edit button at the top left of your screen and use the find button you’d find that quite quickly. I had also noted that the am’t of income tax XOM paid as a “sub-topic” of the main topic.

            >you describe paying income tax rates in the mid 40′s as “ducking tax”

            Nope; I never said that. You are the only one who said that on this blog.

            >i suggest that you try to actually acquire the knowledge you profess to have before opining so vehemently based on incomprehension.

            Yeah, you should do that–you can’t even follow the flow of the comnversation on this blog.

          • david-

            you have refuted nothing. you have now devolved into unsubstantiated claims etc. ohh, you “ripped them to ribbons”! wow. some of us do this all day, day in, day out, for decades. you are not going to fool us with bluster about alleged prowess.

            the claims you made were clearly wrong and now you, on the basis of NO evidence, are just claiming they are not.

            you keep trying to shift the debate away from overall taxes and subsidies and onto the narrow issue of US income taxes which is not relevant to the broader discussion and is pure obfuscation. you may call it a “sub topic” all you want, but that will not make it a meaningful one. even then you are making up facts and ignoring the elephant in the room.

            let’s take it from the top:

            XOM pays out roughly 50% of it’s gross profit in taxes and duties before we even get to the operating income line.

            read the 10k. it’s right there.

            so that is already WAY more tax than any other S+P company pays.

            do you dispute that?

            they then subtract opex and get an op profit figure.

            from that op profit and after interest expense, they then pay an income tax rate in the mid 40′s.

            you then claim that they do not pay the US any income tax. this is not only not true in most years, but also totally irrelevant. (it also skirts the obvious fact that divisions in different countries can have differing p/l and one could make a loss while another gained. we’ll come back to that.)

            the whole discussion was about XOM getting preferential tax treatment.

            how is paying 43% when the top rate in the US is 35% preferential?

            it’s not. it’s punitive.

            trying to subset out us taxes from this is a meaningless attempt at obfuscation.

            this brings us back to the notion that many have espoused (including you as i recall) that XOM is deliberately shifting profit from it’s US entity to foreign ones.

            what you miss is the glaring question: why in hell would they do that?

            US taxes top at 35%. they are paying far more than that. thus, taxes they are paying elsewhere MUST be higher. this is simple algebra.

            why would they deliberately shift profit to a higher tax jurisdiction?

            this is the issue you keep ignoring.

            it would be irrational and harmful to their shareholders to do this.

            if they could pay all their income taxes in the US it would increase their net income by around 8%. that’s a BIG number.

            the simple fact is that you have not pointed to a signle subsidy that they get that is not basic gaap accounting for any company nor have you pointed to any strategy or practice that they use that reduces taxes. you keep trying to focus on one piece of the issue and use it to somehow stand for the whole. if that is how you read financial statements, i have grave concerns for anyone who based their decisions upon your analysis.

            you are pointing an an alleged practice that, if true, increases taxes and then accusing them of cheating on their taxes by doing it.

            can you not see that that makes no sense at all?

            if you were pointing to a company like google that leaves earnings overseas in LOWER tax jurisdictions and therefore pays a LOWER rate, there might be somehting to discuss, but to claim that XOM is deliberately doing so to pay MORE tax is simply absurd.

            this is not favoritism, it’s gouging by foreign countries who can extract fees for access to their resources and force oil companies to pay far higher, not lower rates than others.

            XOM pays far more tax in absolute $’s and in %’s than any other major US company you can name.

            to accuse them of getting freebies on that basis is simply contrary to fact.

            stop and think:

            even IF i gave you a break on your income tax, a special david deal and said you can pay 25% not 35%, would you fell like you were getting a great deal if i also said that first you had to pay half your gross profit in other taxes that others do not face? can you not see that myopic focus on income tax in such a situation would give you the wrong net answer in terms of whether you were in the red or black on this taxes issue? of course, if my special deal was that you paid the fees first and they paid 43% income tax, the case would be even more glaring, wouldn’t it? there would be no basis to argue you were getting benefits. so why do you insist on continuing to make this argument?

            it’s clear that you do not understand how this works and are simply going to keep claiming that you have “showed” things that you have not in an attempt to claim victory.

            may i suggest that the time you spend defending your ignorance would be better spent actually learning how accounting and taxation work?

        • Davie

          PeterK: “ExxonMobil has paid more than $1 trillion in taxes since 1999, which is 3x its profits over that period

          David C: “Think about that for awhile. You make x amount of money and yet 3x in taxes. How long would you remain in business at that rate?”

          Yeah. Let’s think about that for awhile. Wait! wasn’t that YOU who questioned the accounting creds of others? You’re funny.
          Reply ↓

          • actually, no david. he has you dead to rights.

            consider a VERY simple case.

            imagine you have a company with $100 in pretax profit.

            imagine that company pays an 80% tax rate.

            thus you pay $80 in taxes and make $20 in net income.

            you pay 4x in tax what you make in net income, but you are still making money.

            so much for your “claim victory with no facts” tactics and your claims to be a financial statement wizard.

            we would not hire a college intern that made this sort of mistake.

            note that if the taxes are paid above the op income line (as in the case of duties and excise/sales taxes) that this same state could hold true even of operating income.

            but, of course, a wiz like you already knew that.

            riiiiiight.

            you sure seem determined to expose your ignorance here.

            may i offer a piece of advice:

            when you find yourself in a hole, the first step to getting out is to stop digging it deeper.

  5. OMG-this means that those Evil Oil Companies, most likely owned and operated by millionaires and billionaires with private jets who don’t pay their fair share. Those same companies that provide high-paying/high tax revenue generating jobs to millions of Americans. Those companies responsible for discovering gigantic reserves of cheap clean natural-gas. Which in turn is responsible for giving American manufacturers a huge competetive advantage over Asian and European manufacturers. This same cheap, clean, natural-gas which is responsible for attracting hundreds of billions of dollars in foreign investment in new steel mills, auto manufacturing plants, GTL plants, etc, etc.
    Does this mean that American Taxpayers are not throwing away countless billions to companies that fold up and go away, companies like Solyndra, Fisker, etc, etc.
    I’m shocked, just shocked. I hope publications like Rolling Stone Magazine, The New York Times, The Huffington Post don’t find out about this. I mean, what would their readers do if they found out the truth!
    PS I almost forgot something else thanks to all that cheap, clean, natural-gas, less coal is being burned, which means, OMG, cleaner air!!!!

    • >Those same companies that provide high-paying/high tax revenue generating jobs to millions of Americans.

      Actually, no. If they have workers getting high pay, they ship the jobs overseas. “The Wall Street Journal reports today that Corporate America certainly isn’t doing its part to help bring America out of its economic malaise. The paper surveyed employment data by some of the nation’s largest corporations — General Electric, Caterpillar, Microsoft, Wal-Mart, Chevron, Cisco, Intel, Stanley Works, Merck, United Technologies, and Oracle — and found that they cut their workforces by 2.9 million people over the last decade while hiring 2.4 million people overseas. ” See http://thinkprogress.org/economy/2011/04/19/159555/us-corporations-outsourced-americans/?mobile=nc

      >Does this mean that American Taxpayers are not throwing away countless billions to companies that fold up and go away, companies like Solyndra, Fisker, etc, etc.

      Fisker is still operating (albeit barely): “Fisker stopped production in the summer of 2012, and was seeking new investment, and further complicated by the bankruptcy of its battery supplier A123 Systems and the costs involved regarding a recall and repairs to customer cars.” See http://en.wikipedia.org/wiki/Fisker_Automotive

    • >less coal is being burned, which means, OMG, cleaner air!!!!

      Did you know that if you pass the flue gas from a coal burning plant through coulmns of water that you can take out ALL of the CO2 and NO (a worse greenhouse gas than the CO2)? You can then use the algae as either animal feed, farm or garden fertilizer, or treat it with the McGyan process to create even more energy?

      • Well, isn’t that just precious!
        Perhaps you could inform all those nice folks over in the EU.
        Their economies are in such rough shape, they’re having to import all that unused American coal and burn it to save money.

        • >Well, isn’t that just precious!

          WHAT?!? Some sort of lame way to score a point?

          Never thought of telling the EU–I have told the coal association and some power companies and couple of governors.

          • Never thought of telling the EU–I have told the coal association and some power companies and couple of governors.

            Oh Wow! I’ll bet they were really appreciative. I’m sure they had no idea.

  6. Do a Google search for the term “martians and big oil” and you’ll get 1,630,000 results. The number of results for a Google search proves nothing.

  7. I’m a little confused. If “big oil” is more politically demonized (and it is and pretty much everyone knows it) than “green” energy, why would it be reasonable to think that oil receives more subsidies.

    I thought that the general understanding of “big oil” was that it survives IN SPITE of government subsidies to green energy. Why would anyone think that a demonized oil corporation is going to receive equal or greater amounts than that of an energy corporation that is more favored by the masses.

    Instead shouldn’t we discuss more about how green energy doesn’t work?

    • >If “big oil” is more politically demonized (and it is and pretty much everyone knows it) than “green” energy, why would it be reasonable to think that oil receives more subsidies.

      BO is demonized BECAUSE it makes huge profits, pays little or no income tax and yet gets these “subsidies.”

      • “BO is demonized BECAUSE it makes huge profits, pays little or no income tax and yet gets these “subsidies.”

        BO is demonized because it stirs up the left’s mindless masses.

        “Mass movements can rise and spread without belief in a God, but never without belief in a devil.”
        ~Eric Hoffer

          • You are assuming that the KKK and NAZIs are Right-wing. This is incorrect.

            The KKK was founded by Democrats in order to terrorize blacks and other racial, religious, and ethnic groups that Democrats thought “undesirable”.

            The NAZI Party is a socialist party that relies on the fascist variety of socialism to achieve its goals. Most modern members of the KKK and other white-supremacist organizations are sympathetic to the NAZI variety of socialism. Most black-supremacist organizations are sympathetic to the Marxian variety of socialism. They are all socialists.

          • Thanks, “brotio”

            But I’m afraid that you have used too many multi-syllable words.

          • “They are” –David Conklin

            What policy, specifically, of the Nazis leads you to believe that they were “right-wing”, as that term relates to American politics?

          • Would it be the left wong or the right wing that is most likely to put union leaders in concentration camps? Did AH order the business elite or rich people put in in the camps?

          • “We are socialists, we are enemies of today’s capitalistic economic system for the exploitation of the economically weak, with its unfair salaries, with its unseemly evaluation of a human being according to wealth and property instead of responsibility and performance, and we are determined to destroy this system under all conditions.” — Adolph Hilter

            “This year will go down in history. For the first time, a civilised nation has full gun registration! Our streets will be safer, our police more efficient, and the world will follow our lead into the future!” — Adolph Hitler

            “It is thus necessary that the individual should finally come to realize that his own ego is of no importance in comparison with the existence of the nation, that the position of the individual is conditioned solely by the interests of the nation as a whole.” — Adolph Hitler

            “Why nationalize industry when you can nationalize the people?”– Adolph Hitler

            “Contrary to the Marxists, the Nazis did not advocate public ownership of the means of production. They did demand that the government oversee and run the nation’s economy. The issue of legal ownership, they explained, is secondary; what counts is the issue of control. Private citizens, therefore, may continue to hold titles to property—so long as the state reserves to itself the unqualified right to regulate the use of their property.” — Leonard Peikoff

            “As socialists, we are opponents of the Jews, because we see, in the Hebrews, the incarnation of capitalism, of the misuse of the nation’s goods.” — Joseph Goebbels

            “We ask that government undertake the obligation above all of providing citizens with adequate opportunity for employment and earning a living. The activities of the individual must not be allowed to clash with the interests of the community, but must take place within the confines and be for the good of all. Therefore, we demand: … an end to the power of financial interest. We demand profit sharing in big business. We demand a broad extension of care for the aged. We demand … the greatest possible consideration of small business in the purchases of the national, state, and municipal governments. In order to make possible to every capable and industrious [citizen] the attainment of higher education and thus the achievement of a post of leadership, the government must provide an all-around enlargement of our system of public education…. We demand the education at government expense of gifted children of poor parents…. The government must undertake the improvement of public health — by protecting mother and child, by prohibiting child labor — by the greatest possible support for all groups concerned with the physical education of youth. [W]e combat the … materialistic spirit within and without us, and are convinced that a permanent recovery of our people can only proceed from within on the foundation of The Common Good Before the Individual Good.” — National Socialist Party of Germany

            Sounds like the Democrat Party Platform.

          • “In the Nazi economy there was no question of private initiative and free enterprise. All production activities were directed by the Reichswirtschaftsministerium. No enterprise was free to deviate in the conduct of its operations from the orders issued by the government … What made it difficult for many people to grasp the very nature of the Nazi economic system was the fact that the Nazis did not expropriate the entrepreneurs and capitalists openly and that they did not adopt the principle of income equality which the Bolshevists espoused in the first years of Soviet rule and discarded only later. Yet the Nazis removed the bourgeois completely from control. Those entrepreneurs who were neither Jewish nor suspect of liberal and pacifist leanings retained their positions in the economic structure. But they were virtually merely salaried civil servants bound to comply unconditionally with the orders of their superiors, the bureaucrats of the Reich and the Nazi party.” — Ludwig Von Mises

            ““There is more that binds us to Bolshevism than separates us from it. There is, above all, genuine, revolutionary feeling, which is alive everywhere in Russia except where there are Jewish Marxists. I have always made allowance for this circumstance, and given orders that former Communists are to be admitted to the party at once. The petit bourgeois Social-Democrat and the trade-union boss will never make a National Socialist, but the Communists always will.” — Adolph Hitler

          • David

            Would it be the left wong or the right wing that is most likely to put union leaders in concentration camps? Did AH order the business elite or rich people put in in the camps?

            That’s it? That’s how you can tell? That’s really lame. You will have to do better than that.

            Does the name “National Socialist German Workers’ Party” sound right wing to you?

          • >You will have to do better than that.

            You could always hit the history books.

            Right now, I’m reading Glantz’s Barbarossa Derailed.

          • Right now, I’m reading Glantz’s Barbarossa
            Derailed.

            Well that’s really special, but I doubt that reading about the leaves on the trees will help you understand the forest.

          • You’ve assumed too much.

            well, maybe so, but it’s glaringly obvious that you have no idea what you’re talking about if you consider NAZIs to be right wing.

          • > it’s glaringly obvious that you have no idea what you’re talking about if you consider NAZIs to be right wing.

            Not just me. I’ve already shown that others say the same thing, more examples:

            1) “Major elements of Nazism have been described as far-right …” From http://en.wikipedia.org/wiki/NAZI

            2) http://www.spiegel.de/international/germany/far-right-fears-new-push-to-outlaw-germany-s-neo-nazi-party-a-648086.html

            3) “Fascism is a form of right-wing totalitarianism …” from http://www.remember.org/guide/Facts.root.nazi.html

            4) “No one “falsely associates” Nazism with the political right wing. The banners at Nuremberg proclaimed “Nazi=Recht Recht=Nazi” and the simple fact is, that expression, which directly equates Nazis with the right, is factual and real, whereas your mis-impression is completely wrong.

            It’s also productive to study the work of William L. Shirer, who made clear in RISE AND FALL OF THE THIRD REICH, that the word “socialist” in the party’s title had less than zero meaning, and that there was no socialism in the right wing approach known as “national socialism”. Bullock makes similar points in HITLER: A STUDY IN TYRANNY.

            Fritz Thyssen in I PAID HITLER spells out the right wing, big business roots of the Nazi Party, which he financed before World War II. Albert Speer in INSIDE THE THIRD REICH explains how the Nazis not only encouraged capitalism, but “privatized” a good deal of the government-owned arsenal apparatus in Germany, to include the arsenals at Spandau, Danzig, and Ertfurt.

            In the structures of these Q and A responses, here’s a good link to help you understand how the “Nazis are liberal” liars are preying upon the gullibility of their audience:

            http://answers.yahoo.com/question/index;…

            There are other such responses in here. You see, scholars do not tolerate this level of dementia, nor do the victims, participants, students, and witnesses of this depraved philosophy.

            If you really believe such foolishness, the well-informed can only pity you.

            Note I provide references of quality, not scam artists and professional propagandists like Glenn Beck and Jonah Goldberg.

            Analysis provides information. Hog wash yields only b.s.” from http://answers.yahoo.com/question/index?qid=20110111063430AAdaevY

            If you had studied history and poli sci, or spent 5 minutes with an internet search engine you would have known that too.

          • Not just me. I’ve already shown that others say the same thing, more examples:

            - blah, blah, blah

            You weren’t accused of being alone, but I can see now that your primary error is in a failing to understand the meaning of the term “right Wing” as it’s commonly used to describe conservatism and the status quo.

            Of course there is disagreement on a subject as complex as Nazism, and the number of information sources, quotes, and opinions that are available is nearly inexhaustible, so providing a larger number of references than anyone else gives no particular weight to your argument, but I would prefer the words of the primary actors themselves – including Hitler, Goebbels, and the NAZI Party political program adopted in Munich in 1920. You might want to read or reread the excellent comments posted by Che Is Dead.

            Note I provide references of quality, not scam artists and professional propagandists like Glenn Beck and Jonah Goldberg.

            Yes, quality indeed. I’m particularly impressed by your reliance on Yahoo Answers, where truth is determined by majority vote. Good choice, bud.

            If you had studied history and poli sci, or spent 5 minutes with an internet search engine you would have known that too.

            You assume too much.

          • “Fascism conceives of the State as an absolute, in comparison with which all individuals or groups are relative, only to be conceived in their relation to the State.” — Benito Mussolini, former Communist and union organizer

            “Try this thought experiment. Pretend you’re a tyrant. Among your many liberty-destroying objectives are extermination of blacks, Jews and Catholics. Which would you prefer, a United States with political power centralized in Washington, powerful government agencies with detailed information on Americans and compliant states or power widely dispersed over 50 states, thousands of local jurisdictions and a limited federal government?” — Walter E. Williams, right-winger

  8. Late to the game; but I am left wondering..why are these oil subsidies…or any subsidies seemigly so permanent? They happen each and every year. I get farmers getting subsidies during droughts, but during good times shouldn’t they play on a level field?

    Also, no discussion of money’s influence on our politicians and it’s impact on these “subsidies” – keep ignoring that elephant in the room….

  9. ” [the big oil companies] . . . .don’t get any federal subsidies, if that term means “getting money to do something,”

    This is bending the meaning of the word ‘subsidy’. Oil companies (big, medium and small) get huge tax breaks which, among other things, gives them an incentive to develop off-shore sources for oil production rather than in the USA.

    In fact the Big Five oil producers pay almost zero federal income taxes to the USA.

    • The point of the article is that all businesses get tax breaks , such as depreciation of property, plant and equipment. My wife ran a hair salon and we were able to capitalize the construction costs and depreciate them over a 5 year period. We also deducted operating costs such as the electric bill, shampoo, etc. Big oil is doing nothing different. No one in all these comments has pointed out a novel tax treatment that looks anything like a subsidy.

      Keep in mind, subsidy, at least to most people, means a cash payment from the govt. Like farmers who receive subsidies for NOT growing crops.

      And you statement that “… producers pay almost zero income taxes to the USA” is exactly correct, if you consider that every tax dollar paid by Big Oil originates from a consumer like me or you. Unlike the govt, Big Oil can’t print money out of thin air. If they could, I’m sure they’d happily pay more tax.

      • >subsidy, at least to most people, means a cash payment from the govt.

        It has been noted that the use of the word “subsidy” is being done rather sloppily.

        > “… producers pay almost zero income taxes to the USA” is exactly correct, if you consider that every tax dollar paid by Big Oil originates from a consumer like me or you.

        That’s true for all businesses and not just income taxes. Now if we’d eliminate the tax credit for creating jobs overseas, we could possibly zero out all taxes on businesses and we’d have a booming economy again.

        That’s true for all businesses.

  10. The biggest subsidies for oil are indirect military subsidies to prosecute the wars in the Middle East. It is a serious problem that so much of the world’s oil lies in unfriendly areas of the world. By eliminating or reducing oil, we can improve our national security and reduce military spending by hundreds of billions of dollars per year. Without oil wealth, bad actors in the Middle East would find it very difficult to finance jihad, terrorism, and the development of nuclear weapons. They would become much less relevant and regimes would likely be more susceptible to reform pressure.

    • Daniel

      Are you assuming that the “bad actors” in the Middle East have no other market for their oil except to US companies?

      • re: ” Are you assuming that the “bad actors” in the Middle East have no other market for their oil except to US companies?”

        Yup. China and Europe and other countries don’t seem to have the same problem in getting oil from the Middle East.

        I suppose some would say that’s because we provide security for the region but then that raises all sorts of other questions especially if in providing such security it pisses off people who live there.

        How come Al Qaeda only has a jihad against the US when China and Europe also buy oil there?

        • Yup. China and Europe and other countries don’t seem to have the same problem in getting oil from the Middle East.

          The point being that oil and oil products are global commodities, bought and sold by national, and multinational corporations in almost every country in the world, with many including the US simultaneously importing and exporting oil and oil products. The portion of that global supply imported by US companies in excess of exports is only a small percentage of the world total, and eliminating that amount of imported oil would have, at best, a minor impact on those “bad actors”.

  11. I would hope that someone who knows Sen Bernie Sanders
    {the left-wing nutcase} ,
    will e-mail a copy of Mr. Perry’s articles on OIL SUBSIDIES
    to him.
    I know he’s just talking to his misinformed base but that doesn’t mean that somebody shouldn’t challenge the rubbish he espouses. Better still, send this article to every Liberal you know.

  12. I agree with Mark Perry’s analysis, but I would add one other point. To the extent that the politicians can succeed in raising the after-tax cost of exploring for, and acquiring DOMESTIC crude oil, purchases of foreign oil become more attractive. The more oil that is purchased from other countries, and the less that is produced domestically, the fewer high-paying jobs there are in the oil sector (at least in the U.S). In addition, the less oil that is produced domestically, the lower the collective tax obligation is for the oil-producing companies, at least on U.S. operations (foreign earnings could potentially rise a bit, but taxes on foreign earnings can be deferred indefinitely).

    From an economic standpoint, attempting to raise the after-tax cost of acquiring domestic oil is just more idiocy from the left-wing politicians.

  13. 12:04 XOM Exxon Mobil announces Hebron Oil Project to proceed off Canada’s east coast (88.62 +0.07) -Update-

    Co will develop the Hebron oil field offshore the Canadian province of Newfoundland and Labrador using a gravity-based structure that will recover more than 700 million barrels of oil, an increase vs. earlier estimates. Capital cost for the project, which is expected to begin oil production around the end of 2017, is estimated at $14 billion. The platform is being designed for daily production of 150,000 barrels of oil.

    DRILL-DRILL-DRILL
    Read more: http://www.briefing.com/Platinum/InDepth/InPlay.htm#ixzz2H2991mVd
    Under Creative Commons License: Attribution
    Follow us: @Briefingcom on Twitter | Briefingcom on Facebook

    • >expected to begin oil production around the end of 2017, is estimated at $14 billion. … DRILL-DRILL-DRILL

      Note two things:

      1) “expected”–it may, or may not, happen.
      2) the begin date is “around the end of 2017″–the oil may not flow till 2018, 6 YEARS from now. Most people don’t realize that these projects are not only capital intensive they also take a lot of time. Its not like the oil companies have rigs sitting in port just waiting to go out and start drilling.

      There was a show on Modern Marvels about the technology that goes into getting the oil to shore. Beautiful! I told my friends at the time that I think that when God sees stuff like that He says, “My kids did good!”

      • I told my friends at the time that I think that when God sees stuff like that He says, “My kids did good!”

        I wonder what God said when his kids pumped water onto the burning Deepwater Horizon oil drilling platform until it sank to the bottom of His ocean, and for the next 85 days leaked over 100 million gallons of His oil into His Gulf of Mexico?

  14. Mark,
    Don’t know the answer but the discourse on your blog is getting somewhat old. I enjoy the economics, new stuff, and an interesting perspective that you provide. The comments are just political – one side against the other. I’m not sure why normal folks have to try and beat down the left’s inability to grasp reality and facts, but they do. So instead of a discussion it become a shouting match. Hate to see a good blog end this way.

    • ” . I’m not sure why normal folks have to try and beat down the left’s inability to grasp reality and facts, but they do.”

      you can have different points of view, one’s in which you strongly disagree with with, even think are dumb – WITHOUT resorting to the infantile behaviors and name calling that we see here MOST OFTEN coming initially from those who consider themselves more “enlightened” about economics.

      I participate in a wide variety of blogs and have never seen any of them with language we see from the more regular posters on CD.

      It’s not the new folks who wander in that start the name calling – it’s mostly the guys who post here regularly.

      put the blame where it really belongs Aiken_Bob. It’s the “normal” folks that you refer to that are the most frequent of the name callers and often the first to launch into them.

  15. Aiken_Bob

    Some of those you call “normal folk” have a low tolerance for bullshit and feel an obligation to object to it – in part for the benefit of those few others who might be confused by it.

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