When America's biggest corporations make news for their
taxes, it's usually for how little they pay. One recent study, for
example, argues that 26 big corporations, including AT&T, Boeing, and
Citigroup, paid their CEOs more than they paid Uncle Sam in federal income tax.
(Comparisons like that might bring to mind an old Babe Ruth quote. In 1930, a
reporter pointed out that Ruth's $80,000 salary was more than the President's
-- to which the Babe replied "I know, but I had a better year . . .")
Now, another corporate giant is making headlines for its taxes. And for once,
the surprising news involves how much it paid, not how little.
Exxon and Mobil are iconic corporate
names. Both began life as parts of John D. Rockefeller's original Standard Oil
Company. Both were spun off in 1911 when the U.S. Supreme Court found Standard
Oil guilty of illegally monopolizing the oil refining industry. ("Standard
Oil Company of New Jersey" eventually grew into Exxon, while
"Standard Oil Company of New York" morphed into Mobil.) When the two
giants re-joined to create ExxonMobil in 1999, they instantly became the
biggest publicly-traded corporation on earth. And since then, they've only
gotten bigger, with a "market capitalization" (total value of
outstanding publicly-traded shares) topped only by tech giants Apple and
Microsoft, and the largest company on earth by revenue.
You would expect a corporation this size
to pay a lot in taxes, right? And for once, you would be right. In fact,
a recent study by economist Mark Perry reveals that
ExxonMobil has paid over one trillion dollars in taxes since that
merger. That's a full three times the profit the company earned for its
actual shareholders.
Take 2008, for example. ExxonMobil's
profit reached a staggering $46.87 billion, the highest annual profit since the
Romans invented the corporation. But they also paid $36.53 billion in income
taxes, $34.51 billion in excise taxes, and $41.72 billion in other taxes,
including sales taxes. Do the math and you'll see that totals $112.76 billion
-- $9.4 billion per month, $2.17 billion per week, $309 million per day, and
$214,535 per minute.
Skeptics might reply that ExxonMobil
doesn't actually "pay" all those taxes out of its own pocket. They
argue that the corporation just passes the cost of excise taxes on to customers
and merely collects sales taxes imposed by state and local governments on
buyers. But there's no arguing that the economic activity generated by this
particular actor ultimately led to that trillion dollars in worldwide
tax revenue.
We're not here to champion "Big
Oil" in general, or ExxonMobil in particular. We realize ExxonMobil has
been criticized for inadequately responding to various oil spills, funding
research disputing "global warming" claims, and even violating
workers' human rights in Indonesia. We're here to champion the value of
surprising information -- especially when we can use that information to
your benefit.
You'd probably be surprised, for
example, to learn that some business owners deduct their family's medical bills
as a business expense. But that's exactly what a medical expense
reimbursement plan allows. You'd probably be surprised to learn that you can
deduct the cost of crashing your car if it happens while you're driving
for work. But that's what the law allows.
We constantly go to the well for smart
tax strategies, so you don't have to. Call us if you want to put this sort of
information to work for you! And remember, we're here for your friends, family,
and colleagues, too.
Ed Lloyd & Associates, PLLC • Charlotte NC CPA Firm
Tax Reduction, Preparation, Accounting & Wealth Management Services
