When I do the math from segment and income tax footnotes for US Big Oil (Exxon Mobil, Chevron and ConocoPhillips), here are my results in total for the 2000s Lost Decade.
US Revenues of these three US Big Oil companies of $2.7 trillion for the 2000s decade, represented 43% of their Worldwide Revenues of $6.2 trillion. However, US Pretax Income for the same ten years was $224 billion, or an incredibly smaller 28% of Worldwide Pretax Income of $807 billion.
Then testing foreign-owned Big Oil, BP had US Revenues of $922 billion for the 2000s decade, which represented a huge 40% of BP’s Worldwide Revenues of $2.3 trillion. However, BP’s US Pretax Income before Interest for the 2000s decade was $76 billion, or also an incredibly smaller 30% of BP’s Worldwide Pretax Income before Interest of $250 billion.
Just looking at the most recent three years, these four Big Oil Companies had US Pretax Profits Mix, which were dramatically lower than their respective US Revenue mix, as follows:
2007 Second Last Bush/Cheney Year
Exxon Mobil………..19% US Profit Mix..........31% US Revenue Mix
BP…………………......19% US Profit Mix..........36% US Revenue Mix
Chevron……………..24% US Profit Mix..........44% US Revenue Mix
ConocoPhillips……60% US Profit Mix..........70% US Revenue Mix
2008 Last Bush/Cheney Year
Exxon Mobil………..12% US Profit Mix..........30% US Revenue Mix
BP…………………......26% US Profit Mix..........34% US Revenue Mix
Chevron……………..25% US Profit Mix..........44% US Revenue Mix
ConocoPhillips……46% US Profit Mix..........69% US Revenue Mix
The momentum of this trend carried over, and even significantly widened, in the first Obama presidential year of 2009:
Exxon Mobil………. 7% US Profit Mix..........30% US Revenue Mix
BP………………….....12% US Profit Mix..........35% US Revenue Mix
Chevron…………….. 7% US Profit Mix..........43% US Revenue Mix
ConcocoPhillips….24% US Profit Mix..........65% US Revenue Mix
And then for the entire 2000s Lost Decade
Exxon Mobil………. 22% US Profit Mix..........30% US Revenue Mix
BP…………………......30% US Profit Mix..........40% US Revenue Mix
Chevron……………..26% US Profit Mix..........45% US Revenue Mix
ConcocoPhillips…..49% US Profit Mix..........71% US Revenue Mix
I think these above numbers reveal that the US government did not get its fair share of income taxes from not only the three US Big Oil companies, but also from BP. And these are just Financial Statement Income numbers, which do include the effect of the LIFO Inventory tax loophole, since to use LIFO for tax, it also must be used for books. However, it doesn’t include the effect of the additional Big Oil very lucrative tax loopholes like percentage depletion, expensing intangible drilling costs and the benefit of the domestic production activity deduction.
Ignoring the effect of the latter three tax loopholes, which should be closed, if these four Big Oil companies generated US taxable income in total for the 2000s decade at the same percentage as their US Revenues represented of their Worldwide Revenues, then here are the related additional US taxable income computations for the Lost 2000s Decade:
Co.WW Pretax Income.X.(US Rev Mix–US Pretax Inc Mix)=Addtl US Taxable Income
Exxon Mobil…...$457 bil X (30% - 22%) = $36.6 bil
Chevron………....$211 bil X (45% - 26%) = $40.1 bil
ConocoPhillips..$139 bil X (71% - 49%) = $30.6 bil
BP…………….......$250 bil X (40% - 30%) = $25.0 bil
Total………......$1,057 bil……………….... = $132.3 bil
In addition, I think Royal Dutch Shell should follow a similar pattern. It didn’t disclose its segment profits by country, thus I can’t compute a similar impact. However, for just the last six years in total, its US Revenues were $535 bil, or 27% of its Worldwide Revenues of $2.0 trillion.
It seems to me that the above computations of additional US taxable income would be a good starting point to assess a fair windfall profits tax on all of Big Oil for the 2000s Lost Decade.
Also, for 2010 going forward, I think I would put in an additional US income tax each year for situations where a Big Oil company has a US Pretax Income Percentage Mix that is less than say 90% of its US Revenue Percentage Mix.
Further, I think it is only fair to also close the above four earlier mentioned Big Oil tax loopholes.
These Big Oil companies placed immense financial pressure in the 2000s Lost Decade on both US businesses and US individuals, while at the same time, they were generating nosebleed worldwide profits. Thus, I think it is only fair that they pay for some real very healthy US private sector job creation as well as providing funding for innovative very robust, permanent research tax credit, with a clear green emphasis....China is moving up much too quickly on the US competitive technological advantage here.
