Cohen highlighted “total taxes and duties to the U.S. government” of $9.8 billion in 2010. But only $1.3 billion of that went to federal income taxes, the company said in SEC disclosures used by CAP. While that’s a big figure, worldwide income before taxes was $57 billion that year, and U.S. income was $7.7 billion.
Whether it’s a good idea to get rid of the tax breaks has little to do with property taxes or how much companies collect and pass on to the government in gasoline, sales and payroll taxes, says Eric Toder, a tax expert at the Urban Institute.
“All corporations are big tax collectors,” Toder said. “That’s not really the issue.”
Oil companies complain, and Toder agrees, that when it comes to the manufacturers’ tax break, they are being unfairly targeted over something other businesses enjoy (although Toder questions whether any companies should get it).
“We don’t characterize them as subsidies,” said Kurt Glaubitz, a Chevron spokesman. “They’re available to all companies in the oil industry and are similar to those in other industries.” He said the manufacturers’ tax allowance effectively cuts Chevron’s corporate tax rate by two percentage points.
But Toder sees other tax incentives as unnecessary because they are designed to reward investments that are already richly rewarded, especially given high oil prices.
Exxon says that its profits are in line with what other companies make and that it earns just 9 cents on every dollar of sales. That, Cohen said, is a “number you won’t hear in Washington.”
“That’s about half (or less) of what companies in pharmaceuticals or computers make, just to name a few,” Cohen said on a company blog. “But strangely, there’s not much talk about reducing their tax deductions.”
But Wall Street analysts don’t generally pay attention to that — and when Exxon talks to investors, it says they shouldn’t, either. It tells them to watch the company’s “return on capital employed,” or ROCE. Those returns are huge — as high as 34 percent in 2008.
“The Corporation has consistently applied its ROCE definition for many years and views it as the best measure of historical capital productivity in our capital-intensive, long-term industry, both to evaluate management’s performance and to demonstrate to shareholders that capital has been used wisely over the long term,” Exxon said in an SEC filing.