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ExxonMobil: $35 billion in profit, zero in corporate taxes
8:34 am April 7, 2010, by Jay

I spent part of a beautiful weekend doing my taxes; the results were not very pretty, and as a result we’ll be writing a good-sized check to the IRS in the next few days.

But maybe I should just declare myself a corporation, like General Electric. I mean, if corporations can be people, then people can be corporations, right? Last year, according to a Forbes report, GE reported a pretax profit of more than $10 billion yet somehow managed to pay nothing to the US Treasury. In fact, it banked a tax benefit of $1.1 billion against future profits.

ExxonMobil, Forbes found, reported pretax profits of $35 billion but no tax liability to Uncle Sam. Chevron made $18.5 billion in pretax profits, and paid $200 million in U.S. corporate income taxes. Bank of America made $4.4 billion and paid no corporate income tax; according to Forbes, BoA won’t be doing so for years.

As the Forbes story points out, many companies lower their U.S. tax liabilities by parking a lot of their profits overseas in countries with lower tax rates. That would seem, at first glance, an argument for lowering U.S. corporate taxes.


However, the effective corporate tax rate in the United States is actually fairly low and certainly competitive when compared to other industrialized nations, as the graphic from the World Bank’s “Doing Business” report demonstrates. (Note that the effective corporate rate in China, where many industrial jobs are migrating, is considerably higher than in the U.S.)

In addition, many companies aren’t moving actual economic activity and the jobs that come with them to low-tax countries; they are relocating them only on paper. Exxon, for example, “tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands,” Forbes writes. Those countries aren’t actual industrialized economies competing with the US for jobs; they are tax scams with a flag and an embassy.

Maybe that’s what I need to do. Maybe I should open a Jay Bookman subsidiary in Bermuda and assign it all my earnings. Sure, I’d probably have to go visit that subsidiary pretty often, just to keep up appearances. But hey, I hear Bermuda’s nice.

Of course, if everybody started doing that, Bermuda might get so crowded that it would tip over. And THEN where would we be?

danefan wrote:A lot of truth in those statements. A lot.

You can't blame companies for moving earnings offshore. Our tax code and the tax treaties we have signed with just about every industrialized nation allow for it.

OL FU wrote:I heard a journalist from the Economist say in England, he goes on line, spends an hour filling in blanks on a government website, clicks submit and the government sends him a bill for his taxes. Whereas here, we gather up all types of paper to take to a tax preparer who charges a large amount of money creates lots of paper that the tax payer does not understand, signs the documents while worrying that everything is correct so they won't go to jail.

We have one effed up tax code.

Baldy wrote:Sweet.

kalm wrote:

danefan wrote:A lot of truth in those statements. A lot.

You can't blame companies for moving earnings offshore. Our tax code and the tax treaties we have signed with just about every industrialized nation allow for it.

Agreed, you're stupid to not seek every possible advantage within the law.

I just find this information interesting in light of the frequent statement that we have the highest corporate tax rates in the world, and that we need to cut taxes on the wealthy and corporations when those groups are paying a lower effective rate (in some cases 0%) than the average tea-bagger. Yet I'm guessing those corporations use far more government resources through the court system, pollution, fire, police, military etc than the average teabagger.

Where's the outrage?

travelinman67 wrote:

OL FU wrote:I heard a journalist from the Economist say in England, he goes on line, spends an hour filling in blanks on a government website, clicks submit and the government sends him a bill for his taxes. Whereas here, we gather up all types of paper to take to a tax preparer who charges a large amount of money creates lots of paper that the tax payer does not understand, signs the documents while worrying that everything is correct so they won't go to jail.

We have one effed up tax code.

Under current conditions, the IRS and in CA, the FTB, zealously pursue corporations who attempt to make a go of it under U.S. tax law. I've filed corporate for years, and IMHO, unless a tax attorney is employed, the taxman will plow a business under within 5 years. I could cite numerous "contradictory" rules (mostly regarding Interstate Commerce), but the trick is in knowing which ones to comply with, and (facing risk of criminal charges) which ones to ignore.

What Kalm hasn't experienced is the daily barrage of "routine" letters/RFI's from tax agencies, which administratively, account for a large portion of a corporation's overhead (legal). Unfortunately, more than healthcare, the tax code (and agencies) are the most **** up part of U.S. govt., but our legislators will never face up to the task of attempting to redress this failing as it represents their mother's milk.

Great news for tax lawyers.

travelinman67 wrote:

OL FU wrote:I heard a journalist from the Economist say in England, he goes on line, spends an hour filling in blanks on a government website, clicks submit and the government sends him a bill for his taxes. Whereas here, we gather up all types of paper to take to a tax preparer who charges a large amount of money creates lots of paper that the tax payer does not understand, signs the documents while worrying that everything is correct so they won't go to jail.

We have one effed up tax code.

Under current conditions, the IRS and in CA, the FTB, zealously pursue corporations who attempt to make a go of it under U.S. tax law. I've filed corporate for years, and IMHO, unless a tax attorney is employed, the taxman will plow a business under within 5 years. I could cite numerous "contradictory" rules (mostly regarding Interstate Commerce), but the trick is in knowing which ones to comply with, and (facing risk of criminal charges) which ones to ignore.

What Kalm hasn't experienced is the daily barrage of "routine" letters/RFI's from tax agencies, which administratively, account for a large portion of a corporation's overhead (legal). Unfortunately, more than healthcare, the tax code (and agencies) are the most fucked up part of U.S. govt., but our legislators will never face up to the task of attempting to redress this failing as it represents their mother's milk.

Great news for tax lawyers.

dbackjon wrote:Shameful. And shows how screwed up our tax code is.

What Congress needs to do is grow a pair and close all of the loopholes, and provide REAL incentive to keep money onshore. The IRS needs to AGGRESSIVELY audit these companies to stop the practice of recording profit overseas, and expenses at home, which I can assure you companies do.

They need to pay their fair share.

And also shows how misleading the corporate lobbyists are.

dbackjon wrote:Shameful. And shows how screwed up our tax code is.

What Congress needs to do is grow a pair and close all of the loopholes, and provide REAL incentive to keep money onshore. The IRS needs to AGGRESSIVELY audit these companies to stop the practice of recording profit overseas, and expenses at home, which I can assure you companies do.

They need to pay their fair share.

And also shows how misleading the corporate lobbyists are.

dbackjon wrote:Shameful. And shows how screwed up our tax code is.

What Congress needs to do is grow a pair and close all of the loopholes, and provide REAL incentive to keep money onshore. The IRS needs to AGGRESSIVELY audit these companies to stop the practice of recording profit overseas, and expenses at home, which I can assure you companies do.

They need to pay their fair share.

And also shows how misleading the corporate lobbyists are.

kalm wrote:

Baldy wrote:Sweet.

Well played Baldy! If I were you I'd go no-substance/antagonistic on this one too.

danefan wrote:

dbackjon wrote:Shameful. And shows how screwed up our tax code is.

What Congress needs to do is grow a pair and close all of the loopholes, and provide REAL incentive to keep money onshore. The IRS needs to AGGRESSIVELY audit these companies to stop the practice of recording profit overseas, and expenses at home, which I can assure you companies do.

They need to pay their fair share.

And also shows how misleading the corporate lobbyists are.

BTW, despite being wholly incompetent most of the time, IRS agents aren't bad people as some on this board would like to profess. They are simply underfunded and undertrained.

blueballs wrote:http://www.fairtax.org would effectively eliminate corporate income taxes and trun the USA into the largest corporate tax haven in the world. Prettty much all the US corporations who park the earnings and headquarters offshore would return, as well as other companies from around the world. Think of all the new jobs and opportunity!!!!!!

OL FU wrote:I am good with scrapping the tax code and starting over

houndawg wrote:

OL FU wrote:I am good with scrapping the tax code and starting over

Way, way overdue.

I'm also good with deporting the board of directors of these companies that benefit from our system and don't pay ther fair share. Since we keep hearing about how corporations have all the rights of a person, how about they have the reponsibilities too? Like three strikes and you're out...

JohnStOnge wrote:Didn't take long. Here, apparently, is the guy who originally reported that Exxon Mobil paid no US taxes basically retracting what he said:

http://blogs.forbes.com/energysource/20 ... ome-taxes/" onclick="window.open(this.href);return false;

A quote:

"My mistake was in thinking that these figures somehow reflected actual tax benefits and liabilities. So what we should have written was that ExxonMobil 'recorded' no U.S. income taxes for 2009 instead of 'paid.' All you re-bloggers out there, please note the clarification. Mea culpa."