Let’s get specific
But how much might these taxes actually cost the oil companies that we, as shareholders, invest in?
API says the oil and gas industry as a whole already pays “more than $86 million to the federal Treasury every day.” This works out to an industrywide tax bill upward of $31 billion — so by loading $90 billion on top, the administration is proposing to quadruple the industry’s tax bill, which does sound a bit harsh.
Using the rough “quadrupling” estimate as a ballpark figure, and spreading it out across the industry equally, you might think Exxon Mobil Corporation (NYSE:XOM)‘s tax bill, for example, would go from last year’s $30.4 billion to nearly $120 billion — wiping out the company’s $45 billion profit entirely.
The truth may not be quite as bad as that (for shareholders) — nor as lucrative as that (for taxpayers hoping Exxon Mobil Corporation (NYSE:XOM) will shoulder more of their burden). You see, while Exxon Mobil Corporation (NYSE:XOM) paid more than $31 billion in taxes last year, the vast majority went to the foreign countries in which it does business, and from which it obtains much of its oil. Exxon actually only paid the IRS a bit under $3 billion. So even in the worst-case scenario of a quadrupling of Exxon’s U.S. income-tax liability, we’d probably only be “milking the tiger” for an additional $9 billion in taxes, reducing the company’s profits by 20%.
Similarly, only $687 million of ConocoPhillips (NYSE:COP)‘ $7.9 billion in 2012 taxes ended up at the IRS.
Chevron Corporation (NYSE:CVX) investors, on the other hand, may have more to worry about, as $3.9 billion of the $20 billion it spent on income taxes in 2012 went to the United States. Pass all of these new taxes and impose them on Chevron Corporation (NYSE:CVX) … and its U.S. tax bill could swell to perhaps $15.5 billion, reducing its profits by $11.6 billion — or 44%.
So why do conservatives and liberals alike oppose higher taxes on oil and gas companies? Maybe they just own a lot of Chevron Corporation (NYSE:CVX) stock.
The article How Do Americans Feel About Higher Energy Taxes? originally appeared on Fool.com and is written by Rich Smith.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Chevron and Intel and owns shares of Intel.
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