WILLisms.com: Trivia Tidbit Of The Day: Part 268 -- Oil Industry Taxes.

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Trivia Tidbit Of The Day: Part 268 -- Oil Industry Taxes.

Large Oil Industry Tax Payments Undercut Case for "Windfall Profits" Tax-

Oil companies earn a lot these days. But they also pay a ridiculous amount in taxes:

When the federal statutory corporate income tax rate of 35 percent is added to the weighted average of state corporate income taxes, the resulting rate of 39.3 percent means that corporations in the United States are currently at an international competitive disadvantage. In fact, as recent research has indicated, the top combined state and federal statutory corporate income tax in the U.S. is higher than any other country in the OECD.
Furthermore, the average effective tax rate on the major integrated oil and gas industry is estimated to equal 38.3 percent. This exceeds the estimated average effective tax rate of 32.3 percent for the market as a whole.

You can't simultaneously wean America off of foreign sources of energy and keep taxes so relatively high.

It's also interesting that the solution some have for high gas prices (which aren't in the news anymore now that they're lower) is to raise the gas tax. How John Kerrian.

The faceless entity that is "big oil" won't feel the punishment. They'll just pass along those additional taxes onto real people:

If the corporate income tax burden is entirely borne by their employees, the tax ranges from $198,179 per Chevron employee, to $276,732 per employee at ConocoPhillips in 2005. It is important to note that these calculations are exclusively based on corporate income taxes paid and neglect the vast assortment of additional taxes previously noted.
Conversely, if the corporate income taxes are passed on to American consumers, we all share in the burden by paying higher prices on products—most notably a higher price of gasoline at the pump. The debate over who ends up paying the bulk of corporate taxes is far from conclusive, but the undisputed and most significant fact is that corporations do not pay taxes; people do.

Source:
The Tax Foundation.

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Previous Trivia Tidbit: Property Tax Relief.

Posted by Will Franklin · 14 February 2006 10:48 PM

Comments

What I find interesting in the high gas price debate is this... Everyone is angry with the oil companies for making so much money but no one seems to be pissed at themselves for driving up demand so much by buying gas hogs. If the average passanger vehicle got 35 miles to the gallon what would happen to demand? Decreased demand would lower the price. Consumers are responsible for the price of oild going through the roof.

And yes i agree, (not really) since oil companies are having such a tough time lately, a tax break IS a great idea.

"The government may waive up to $7 billion in royalty payments from companies pumping oil and natural gas on federal territory in the next five years, the New York Times reported on Tuesday, citing administration officials and budget documents.

The royalty relief would amount to one of the biggest giveaways of oil and gas in U.S. history, even though the administration assumes oil prices will remain above $50 a barrel throughout that period, the Times report said.

The report cited estimates in the Interior Department's recent budget plan that would allow companies to pump about $65 billion in oil and natural gas without paying royalties."

Posted by: thomas at February 15, 2006 08:44 AM

I find it interesting that people go out and pay $9 or $10 for a cup of coffee and yet people are SHOCKED by a gallon of gasoline costing $2.70 ???
We buy cars that cost tens of thousands of dollars and yet we gripe about having to pay for fuel??? I am all for encouraging better fuel efficiency for cars, BUT in the meantime the Oil and Gas bussiness creates Jobs and growth!...

Posted by: Zsa Zsa at February 15, 2006 11:30 AM

See how much it would cost to fill up your car with HP ink jet cartridges = $48,000 in a 12 gallon tank

Starbucks venti cafe Mocha in a 12 gallon tank = $595.50 if you don't tip or get a lemon bar

Mazola Corn Oil would cost you $208 dollars in a 12 gallon tank.

But hey, gas costs too much.

You don't even want to know what Evian looked like.

Posted by: Rob B. at February 15, 2006 01:44 PM

That's what I am saying... Oooooooooh Rooooooooob
Thanks man...

Posted by: Zsa Zsa at February 15, 2006 04:11 PM