Four times a year, Democrats and the Left cherry-pick oil and natural gas companies’ quarterly earnings and supplementary data in an attempt to justify tax increases on some of America’s largest employers. Yes, Exxon and other American oil and natural gas companies make a lot of money, but they also pay a lot of taxes and employ a lot of people—two facets of these companies that are rarely, if ever, discussed.
You are “Big Oil”
Today Exxon announced 3rd quarter profits of $10 billion. So when oil natural gas companies make billions, who profits? If you have a retirement fund or are invested in the stock market, chances are you own a share of an American oil company—18 percent of oil and natural gas companies are owned by IRAs, 31 percent by pension funds, 20 percent by asset management companies (mutual fund, etc), 21 percent by individual investors, 6.6 percent by other institutional investors. Corporate management owns less than 3 percent of all oil natural gas companies.
Oil and natural gas companies pay a lot of taxes
Exxon’s global effective income tax rate is a whopping 44 percent. This is due to the fact that many foreign governments charge a high royalty tax on oil production. Over the past five years, Exxon has paid $171 billion in global income taxes.
Domestically, Exxon’s effective income tax rate over the past five years is 32 percent. Over the same period, Exxon paid $21 billion in income taxes. But that’s not all, Exxon still pays the government royalty or lease payments, property taxes, excise and sales taxes on gasoline. When summed, the total tax expenses for Exxon and other oil and natural gas companies reaches the point of absurdity.
Paying nearly $100 million a day in income taxes, the oil and natural gas industry’s tax expenses average 48 percent, compared to 28 percent for other S&P Industrial companies. Using any tax metric, oil and natural gas companies are forking over lots of cash to the government.
And create a lot of jobs
Supporting more than 9 million well-paying jobs, America’s oil and natural gas industry is one of the few growing areas of our economy and responsible for 7.5 percent of GDP. But oil and natural gas companies want to create even more jobs. If the Obama Administration would begin to issue permits, sell leases, and lift bans on government land, the oil industry would invest hundreds of billions in domestic production. This flood of capital would create a million jobs over the coming years and net the federal government nearly $200 billion in taxes.
Unfortunately, Democrats and the Obama Administration have consistently attempted to raise taxes on this heavily taxed industry. Raising taxes on oil and natural gas producers would force companies to delay or scrap future projects as it becomes significantly harder for them to recover their investment costs.
You don’t know what you got ‘til it’s gone
The Obama Administration’s policies have caused expensive rigs to leave the Gulf of Mexico—taking tens of thousands of jobs with them. Future policies which hamstring natural gas production and close the Trans-Alaska Pipeline System would have the same effect. With a 9 percent unemployment rate, the Obama Administration should be facilitating growth and investment—not taxing it.