There was an excellent comment left by Ken Bouley a while back when I babeled on the difference between U.S. and European gas prices that got me thinking: How much money are the various governmental agencies in the U.S. collecting in tax revenues from petroleum-related activities? While there are still angles and pieces to this equation that I have not yet drawn conclusions, there is certainly enough enlightening information to share. Let us begin with the tax receipts that are gleaned directly from income taxes on American oil companies and the per gallon Excise tax levied at the pump.
Dollars in thousands
The Big Three U.S. Oil Companies (ExxonMobil, Chevron, ConocoPhillips) account for a combined $54.7 billion in income taxes paid to the government. There were nine other U.S. oil companies for which I was able to find financial information, and those account for the Income Tax – Other Oil Companies category at $11.1 billion. The Gasoline Taxes at $4 per gallon is calculated using the same estimate from the U.S. versus European Gas Prices blog. The per gallon average tax rate of $0.44 cents is multiplied by the estimated annual comsumption of gasoline in the U.S. Ultimately, there are $130.1 billion in income taxes and excise taxes collected directly from petroleum and gasoline operations. Note: this excludes the taxes levied on your natural gas bills, electricity, and the portion of Individual Income taxes that go to providing government vehicles with gasoline and buildings with natural gas. It also excludes payroll taxes collected from U.S. citizens who work for oil companies. Either way, $130.1 billion collected in gasoline and other petroleum taxes is a daunting number, but what does it mean in the context of the U.S. government’s total tax receipts picture?
Dollars in thousands
The taxes collected by the oil companies ($65.9 billion) accounts for 17.8% of all Corporate Income Tax collected by the U.S. government in 2007. Twelve companies out of the countless thousands in the U.S. account for almost one-fifth (1/5) of the total income taxes paid by all Corporations. The estimated amount of excise taxes collected ($0.44 per gallon in your pump price) at $64.2 billion accounts for approximately 98% of all excise taxes collected. Examples of other excise taxes are: taxes levied on alcohol, tobacco, and firearms. In the big picture of total tax receipts, the $130.1 billion described above accounts for 5.1% of all taxes collected by the U.S. government. Now, how are these funds being appropriated by the government?
Dollars in thousands
The U.S. Federal Government is operating at a deficit, as shown above, but the deficit figure displayed may not be the official figure because of adjustments the IRS includes such as uncollected taxes which are not accounted for in this analysis as that is an immaterial issue for this discussion. The total funding dispersed to Transportation and Energy equals $100.4 billion in 2007. The direct taxes received from petroleum activities in 2007 were $130.1 billion. This leaves a gap of over $29 billion between taxes collected and what is appropriated to government activities directly related those taxes. The $29 billion is going to cover losses on other government budget items. This is, of course, how most corporations work as well: you cover your budget overages in some areas with budget surpluses in other areas.
However, this does not account for the quality of the decision to have a surplus in any one area. The reason that there is a surplus in the transportation spending versus the taxes collected relating to it, is because there are a series of decisions made to not repair or upgrade certain sections of the infrastructure. So, the surplus is being created from a lack of funding for construction that keeps roadways structurally safe.
There will be more analysis to come, this was an intial look at the tax-picture of gasoline and oil in the U.S. It is very interesting that the government has been complaining about big oil’s profits recently, especially since they are getting over $65 billion in income tax revenue from their operations. The Excise tax is being bolstered significantly as well because it is a percentage of the price at the pump. That means the bigger the price tag at the pump, the higher the per gallon excise tax as well. Somehow I doubt the government is really concerned about the increased petroleum prices because they are profiting on a scale even larger than the oil companies.
12 Comments
The article doesn’t cite a single source for the numbers it presents?
Click the links highlighted in red – they are the direct links to the sources.
Or if you are Red-Green colorblind, wave your mouse pointer wildly over the page until you figure out where the links are.
I apologize Jake, the change of color for the links is not friendly to the color defunct. However, I can assure you that they jump out nicely and are quite noticeable to everyone else.
This is an interesting and unanticipated side-effect of the link change. Not gonna lie, though, I like it.
As messed up as taxes are in the US, and the fact that the power lay in the corporations and special interest groups who pay the politicians through election funding to buy our votes, we need to look at taking the power back with the consumption tax (AKA “Fair Tax”). If you look at running any business, the cost of taxes and regulation are a cost of business, like any other. All businesses simply apply that to the cost of the product or service they provide, thus the consumer, you and I, pay ALL the taxes congress can come up with.
How dare those big bad evil oil companies supply the government with enough funds to pay for all the unemployed drug addicts, their illegitimate children, and their free health care. Is there no limit to their cruelty?
While it is truly bad enough that the Transportation and Energy budgets are getting skimmed by $30 million as your post points out, I find it real interesting to see that $247 million is still unaccounted for in 2007. This reminds me of the beginning of the Revolutionary War.
“No Taxation Without Representation”
Absolutely Jack,
Only the scum of the earth benefits from social programs. Let’s cut them all so those poor billionaires can have more money to spend on solid gold toilets and incredibly tiny dogs. Trickle down economics doesn’t trickle far enough. Fact: CNN told me so.
But keeks… when money is taken from the rich, they pass along the loss in the form of job cuts, pay reductions, etc. When the rich are taxed less, they spend more and hire more. In order to have a pool where a bubble up is possible, you must first have a trickle down to fill the pool.
OK, who doesn’t miss Ronald Reagan after that rousing comment?
I keep seeing the “Fair Tax” touted as a solution to the tax issue. The fair tax is neither a “fair” nor equitable solution to the problem. Government will still be getting the same share or our wealth. Simply spreading it around does nothing to reduce the waste, arrogance, and growth of government. It will still be sucked out of the private sector and transferred to the bureaucrats. A fair tax can only be established when government is reeled in to its proper limited function.