The Absurd Report

Taxation: Every time oil companies report strong earnings they seem to tap into a gusher of resentment on the left. One of these days the critics might look at what these businesses are contributing besides vital energy.

When Exxon Mobil recently released its 2007 results, Democratic Rep. Ed Markey complained that the “oil companies are turning the American consumer upside down at the pump, shaking out every last cent.”

A year ago he called the company’s record 2006 profit “outlandish.” Fellow Democrat Rep. Maurice Hinchey of New York called last year’s profit “obscene” and said “the way that Exxon Mobil has crossed the moral threshold is completely unacceptable.”

Then there’s Sen. Hillary Clinton, the presidential wannabe. A year ago, speaking before an audience of Democrats, she said “I want to take” the profits from oil companies.

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Consider the magnitude of the contributions from Exxon alone.

On those “outlandish” 2006 profits, the company paid federal income taxes of $27.9 billion, leaving it with $39.5 billion in after-tax income. That $27.9 billion was more than was collected from half of individual taxpayers in 2004.

In that year, 65 million returns — which represent far more than 65 million taxpayers because of joint returns — paid $27.4 billion in federal income taxes. And those taxes were paid on adjusted gross income of $922 billion, according to IRS data, yielding an average tax rate of 2.97%.

This year, according to Mark Perry, the economist who made this striking observation on the Seeking Alpha Web site, Exxon will pay $30 billion in taxes, at a 42% rate, leaving $40.6 billion in profit.

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And here is another “Eye Opener”

More telling, though, is the group’s contention that the 58 million U.S. households — out of roughly 115 million total — that have no tax liabilities or simply don’t have to file would get nothing.

Seems to us that if Washington is having a hard time finding taxpayers who are eligible for tax rebates, then a lot of Americans must have been wiped off the tax rolls.

And if they’re not paying the taxes, then who is? Despite fewer taxpayers, the flood of tax revenues into the capital hasn’t abated. In 2008, personal income tax receipts will have increased for four straight years following a recession-caused dip in the early 2000s.

The shrinking of the tax rolls is no secret. The Tax Foundation has noted that in 2000, a year before the first tax cuts under Bush, roughly 30 million tax returns had no income tax liability; every dollar those earners made they kept. By 2004, a year after the second round of cuts was passed, 43 million returns had no tax.

In all, the Tax Foundation says, more than 25 million Americans have been wiped off the federal tax rolls. Thanks to President Bush.

No honest person could look at the data and say that the system favors the rich over the poor. So that leaves two possibilities for those who continue to say the Bush tax cuts foster inequality: They are lying for political gain, or they are ignorant.