RECORD PROFITS MEAN RECORD TAXES
February 13, 2008
Every time oil companies report strong earnings they seem to tap into a gusher of resentment on the left. One of these days the critics might look at what these businesses are contributing besides vital energy, says Investor's Business Daily (IBD).
- From 1977 to 2004, according to Tax Foundation data, U.S. oil companies cleared $630 billion after taxes while paying $518 billion in federal and state corporate taxes at an average rate of 45 percent.
- Over the same period, an additional $1.34 trillion in excise fuel taxes was collected from consumers by the oil companies and turned over to various governments.
Consider the magnitude of the contributions from Exxon alone:
- On its 2006 profits, the company paid federal income taxes of $27.9 billion, leaving it with $39.5 billion in after-tax income.
- That $27.9 billion was more than was collected from half of individual taxpayers in 2004.
- In that year, 65 million returns -- which represent far more than 65 million taxpayers because of joint returns -- paid $27.4 billion in federal income taxes.
- And those taxes were paid on adjusted gross income of $922 billion, according to IRS data, yielding an average tax rate of 2.97 percent.
That profit, so loathed by the left, actually plays an important role, says IBD. The money is plowed back into research, development, exploration and drilling to keep the oil flowing, and distributed to stockholders who have risked their capital to build an enterprise that provides an essential good -- the lifeblood of our economy. Far from imposing a hardship on the economy, Exxon Mobil's profits increase the wealth of those same shareholders, many of whom are everyday Americans feeling the bite of high gasoline prices.
Source: Editorial, "Record Profits Mean Record Taxes," Investor's Business Daily, February 12, 2008.
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