Who paid Exxon's tax bill?

Question

Last year, Exxon paid $30 billion in taxes. Did they absorb that? Take it out of their profits? Or was it added back on at the pump resulting in even higher gas prices?

Would a windfall profits tax likewise be absorbed? Or result in yet higher prices?

Answer 1

I guess we did?

Answer 2

As in all business. The consumer always ultimately pays or the business cannot survive. And yes, if a windfall profits tax was enacted then all of us would ultimately pay more for their products. Overall Exxon did well last year for their investors but their profit margin is not out of line compared to other major corporations over a larger period of time. If you want to get interested, look at the sections of our economy that have to have government subsidies or price control, to survive at the current pricing levels. Like peanuts, tobacco, alcohol, steel, lumber, sugar,... I always get disturbed at the rationale of 'protecting' any part of our economy and it always seems to end up costing the individual more in indirect or direct taxes and benefiting a company with a good Washington lobby.  

Answer 3

taxes are taken out of revenues!

Answer 4

The federal, state and local gas taxes (known as excise taxes) are typically paid by the supplier (Exxon in your example) to the government.  However, the tax is passed down the line from the supplier to the distributor all the way down to the pump.  

A windfalls profit tax would result in higher prices at the pump.  This comes down to simple economics.  Companies throughout the supply change would suddenly have more risk to manage.  As profits were penalized, there would be less incentive for domestic companies to increase refining capacity.  As supply decreased, prices would increase.  This would also increase dependence on foreign oil.  

A windfalls profit tax was instituted in the 1980s and it eventually led to a decline in the US energy infrastructure.  This proposed tax is about political scapegoating, not a real answer to energy prices.  If this legislation passed, the cost would ultimately be paid by consumers.