Obama, Exxon Mobil, economics and populism
Posted by: McQ
From Barack Obama's victory speech last night, this line struck me as scary:
I know that it won't be easy to change our energy policy. Exxon Mobil made $11 billion last quarter. They don't want to give those profits up easily.
It really tells you where he's coming from, because he is only telling part of the story. The part that appeals to his audience - that appeals to populism.
Yes, Exxon Mobil made $11 billion last quarter. But they also paid 41% taxes on that income.
Dr. Mark J. Perry did a little calculating on his blog about Exxon Mobil's tax "contribution" based on its profits.
I think you'll find the results interesting.
Over the last three years, Exxon Mobil has paid an average of $27 billion annually in taxes. That's $27,000,000,000 per year, a number so large it's hard to comprehend. Here's one way to put Exxon's taxes into perspective.
According to IRS data for 2004, the most recent year available:
Total number of tax returns: 130 million
Number of Tax Returns for the Bottom 50%: 65 million
Adjusted Gross Income for the Bottom 50%: $922 billion
Total Income Tax Paid by the Bottom 50%: $27.4 billion
Conclusion: In other words, just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers, which is 65,000,000 people! Further, the tax rate for the bottom 50% is only 3% of adjusted gross income ($27.4 billion / $922 billion), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).
Barack Obama doesn't tell that part of the story. Nope, only the part about those huge corporate profits find their way into his "inspirational" speeches. There he demonizes a company and an industry which provides precisely what he says he wants for this country - jobs.
Nor does he mention the fact that it provides a strategically vital commodity that increasingly costs more and more money to extract and refine.
And, of course, it's Exxon Mobil's fault we have no alternative for our insatiable desire for oil, isn't it? Now that the world's thirst is increasing as well, it is Exxon Mobil which is the blame for the market increase in price based on demand, correct?
It is certainly Exxon Mobil's fault that we can't drill in a featureless wasteland in Alaska which could provide for much of our own domestic oil need and possibly ease prices a bit, isn't it?
No, Obama never mentions any of that in his speeches. And he certainly never mentions the fact that that company alone pays more in taxes every year than half the "taxpayers" in this nation, does he?
One corporation.
Phenomenal.
But get used to it. This is populism with a silver tongue, and he'll be taking the same song and dance to big pharma, health insurance carriers and any other corporation he can demonize to those ignorant enough to buy his message but unable to comprehend the fact that he is attacking the very foundation of our wealth and prosperity as a nation.
What's ironic, of course, is that 41% - which Mr. Obama seems to imply isn't enough, given his statement - will be paid by the very people, who are cheering him as he attacks Exxon Mobil, every time they fill up their car. Funny that.
The dream of the founding fathers was to have a knowledgeable and educated electorate who could see through rhetoric like this and be able to vote accordingly. If they could see what is happening today, I think their confidence in the electorate would be profoundly shaken. That line about Exxon Mobil's profits was a huge applause line for Obama. If he has his way, that bottom 50% of taxpayers - the 50% who can afford it the least - will end up paying much higher prices at the pump than they are now, and they don't even understand that. But even as they pay higher prices at the pump for their gas, they'll have the satisfaction of knowing that evil corporation isn't making those huge profits it once was, won't they?
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More on Exxon
Posted by: Dale Franks
I also want to point out, as an addendum to McQ's point below, that the $11 billion quarterly profits—while a large number taken by itself, isn't the full story at all.
Last year, Exxon had $404.55 billion in sales, and ended up with $40.61 billion in profits. That's a net profit margin of 10.04%. Compare and contrast with the companies below:
Microsoft
Sales: $57.90 Bil
Income: $16.96 Bil
Net Profit Margin: 29.29%
3M
Sales: $24.46 Bil
Income: $4.10 Bil
Net Profit Margin: 16.97%
Monsanto
Sales: $9.12 Bil
Income: $1.08 Bil
Net Profit Margin: 12.11%
General Electric
Sales: $172.74 Bil
Income: $22.47 Bil
Net Profit Margin: 13.01%
Wells Fargo
Sales: $35.18 Bil
Income: $8.06 Bil
Net Profit Margin: 20.45%
We can keep going, but what's the point?
So, yes, $40 bil a year is a big number. But it represents only 10% of revenue. All of the rest goes to pay bills, or the government. in other words, for every dollar of sales that Exxon makes, anywhere in the world, they get to keep one thin dime.
That's what makes Obama's remarks so reprehensible. The only reason that Exxon rakes in the obscene profit of $40 bil a year is because they sell nearly half a trillion dollars in oil every year. That $40 bil profit represents one dime in profit for every dollar of sales.
But, a 10% profit is just too much for Barack Obama.
I guess his Houston volunteer office was displaying the right flag, after all.
AI
