(CNSNews.com) – In commenting on the talks about deficit reduction and raising the federal debt limit, President Barack Obama said he wanted to eliminate tax deductions for oil and gas companies “that are making hundreds of billions of dollars.” However, he did not mention that the top three U.S. oil companies alone paid $42.8 billion in income taxes in 2010, according to the Securities and Exchange Commission (SEC).
At his June 29 press conference at the White House, Obama said, “There’s been a lot of discussion about revenues and raising taxes in recent weeks, so I want to be clear about what we’re proposing here. I spent the last two years cutting taxes for ordinary Americans, and I want to extend those middle-class tax cuts. The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund managers and corporate jet owners.”
“[I]f if we choose to keep tax breaks for oil and gas companies that are making hundreds of billions of dollars, then that means we’ve got to cut some kids off from getting a college scholarship,” said Obama. “I think it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up a tax break that no other business enjoys.”
The top three oil companies in the United States are ExxonMobil, ConocoPhillips and Chevron. According to the SEC filings of those companies, as analyzed by Forbes, ExxonMobil’s pretax income in 2010 was $52 billion, from which it paid $21.6 billion in income taxes worldwide, leaving a net income of $30.5 billion. That equals a tax rate of 45 percent, which is 10 percent above the statutory corporate rate of 35 percent.
ExxonMobil’s total tax bill, worldwide, was $89 billion in 2010, comprised mostly of sales and excise taxes. ConocoPhillips, for comparison, paid an additional $16.8 billion in “other taxes” beyond its income taxes, reported Forbes, and Chevron paid an additional $18.2 billion in “other taxes” in 2010.
According to the American Petroleum Institute (API), oil and natural gas companies employ 9.2 million Americans and account for 7.5 percent of GDP. Those companies added about 2 million jobs to the economy between 2204 and 2007. As of 2010, the five largest American oil companies employed a combined 245,390 people.
The API further reported that in 2010, oil and natural gas companies averaged a net profit of 5.7 cents per dollar of income. Also, an average of 49.5 cents of every dollar oil companies made in 2010 went to income taxes.
The oil and gas industry also generates $533.5 billion in labor income, which equals about 6 percent of U.S. labor income, according to the study. The value added to the U.S. economy by the oil and natural gas industry is $1.1 trillion (7.7 percent of GDP), according to PricewaterhouseCoopers.
In 2010, the oil and gas industry spent roughly $275 billion on capital projects and since 2000, the industry has invested $2 trillion in American capital projects in resource exploration, acquisition, research and alternative energy moving America towards energy independence and cleaner energy, according to API.