Buried in the C-section of the Wall Street Journal, Steven D. Jones reveals Monday: "Oil companies operating in the U.S. typically pay taxes at or above the 35% rate on corporate profits. But for about one in four big oil companies, tax rates have fallen recently, even as profits have soared." Full (paid-restricted) article here. Excerpts:
Of the 87 publicly traded oil companies with a market capitalization of more than $2 billion, the effective tax rates of 21 companies fell in the most recent quarter compared with average rates paid over the trailing 12 months, Reuters data show.
Royal Dutch Shell PLC's tax rate fell to 37% in the third quarter from 41%, BP PLC's declined to about 27% from more than 30% and Burlington Resources Inc.'s dropped to about 33% from 37%. The rates were derived by dividing the amount of income tax paid by taxable income.
A Shell spokesman said the company wouldn't discuss why its tax rate changed because the information was "commercially sensitive." Burlington spokesman James Bartlett said the drop in the company's tax rate "could well be reversed in the fourth quarter." A BP spokesman declined to comment.
Companies' tax rates can rise or fall because of tax credits, settlement of tax cases, changes in currency values, reinvestment strategies and operating losses, among other factors. Still, the lower tax rates may become a political headache for companies that already are confronting accusations of price gouging.