Criticism of Exxon taxes uninformed

This letter is in response to the Aug. 9 letter from Mr. Philip Graf regarding the corporate income taxes of Exxon Mobil. Apparently, Mr. Graf gets all of his “facts” from MSNBC. I am always amazed with the information the left-wingers have regarding corporate income taxes since corporate income tax returns are private. No one except Exxon Mobil, their auditors and the IRS knows how much federal income tax Exxon Mobil paid for any one year. Taking bits and pieces of information from annual reports does not give you anywhere near enough information to determine the federal income tax rate for any company.

Based on the 2011 audited Exxon Mobil financial statements that are public information, Exxon had $73 billion of income before taxes. Based on that profit they paid, or will pay, $31 billion in federal, state, local and foreign income taxes — an effective rate of 42 percent. In fact, their tax rate has been above 40 percent for at least the last five years.

The corporation auditors believe that this rate is a fair representation of their current and future tax exposure based on income. Financial statement income and tax return income are calculated based on two entirely different sets of rules. You can have a large financial statement profit in one year and have no federal tax income liability in the same year. Or, you can have no financial statement income and a large federal tax liability in that same year.

Finally, Exxon spent almost $31 billion on capital expenditures in 2011. It used 40 percent of its pretax profit on purchases including plants and equipment that might be considered stimulative to the economy. Without profit you cannot replace equipment or expand.

Please watch something besides MSNBC. MSNBC and “facts” are seldom in the same neighborhood.

Jay Dahl

Palatine