Chevron’s High Octane Hubris
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By Donald Cohen
Cry Wolf Project
Sometimes a simple statement can provide a window onto a worldview; in this case, the arrogance of privilege.
The City of El Segundo, home to a huge Chevron refinery, is considering raising the oil giant’s taxes to help meet the demands of a growing town. Refineries around the state pay far higher taxes to their local governments than Chevron does. The proposal would bring Chevron in line with its competitors and in line with a common sense definition of fairness.
Chevron, of course, wants to hold on to its growing profits and is fighting hard against any tax increase. It is doing the same at its Richmond, California refinery. In 2011, the company asked Contra Costa County to lower its assessed property value from $1.8 billion in 2007 and $1.15 billion in 2008. Contra Costa assessed the property value at $3 billion. If an appeals board rules in Chevron’s favor, the county will have to refund nearly $60 million dollars to the corporation, taken directly from public services.
But a comment on the El Segundo matter by a Chevron spokesman, Rod Spackman, puts on full display the hubris and confusion of powerful corporations.
“We would have hoped when this issue surfaced they would have first come talk to us and said, ‘Let’s work on a constructive path forward,’” Spackman told the L.A. Times.
The company is confusing the power that comes from its wealth – political and economic power – with the civic power of a democracy.
Why would or should city council members have “talked to them first” – what would we expect them to say? Sure, go ahead? “Coming to us first” sounds a little too much like, “Ask our permission.”
Chevron prefers the hidden-from-view, opaque private meeting where it can alternately threaten job loss or political consequences, plead poverty and demonstrate its charitable benefits to the community. In the sunshine of public meetings, Chevron would have a much harder time pleading poverty or unfair taxation when the facts say otherwise.
The oil company reported net fourth-quarter 2011 profits of $5.12 billion, bringing its total earnings for 2011 to more than $26 billion.
According to the Times, Chevron’s El Segundo tax bill is $5 million, far less than other cities receive from its refineries. Torrance got $9.8 million from Exxon Mobil and Carson got $10.2 from BP. Chevron paid $15.4 million to Richmond for its Northern California refinery. And other major employers in El Segundo pay five times more per acre than Chevron.
Democracy means we all decide, it doesn’t mean we ask permission. We count on elected officials to engage all of us, not just some of us, in the public decisions that affect us all. Chevron’s had a good deal for 100 years by paying lower taxes — but all of El Segundo has lost out.
Chevron should be heard, but not heard first nor maybe even last. The promise of democracy is that everyone can be heard equally – whether they hold enormous political and economic power, like Chevron, or they are a resident who wants better city services.
Oil companies have enjoyed record profits – Chevron too. They should their pay fair share in taxes and they should get in line to express their views – just like the rest of us.
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Donald Cohen is the director of the Cry Wolf Project, a nonprofit research network that identifies and exposes misleading rhetoric about the economy, regulation and government. He is also the chair of In the Public Interest, a national resource center concerned with privatization and responsible contracting.
Remember, California is the only oil producing state that does NOT receive any money for oil extraction!
That's because there are so many other taxes (+ high labor costs) here that if there were one it would be unsupportable and not worth extraction.
Sometimes I think comments should just be taken off this site because its so filled with right wing trollers, paid corporate consultants, and just really, really ignorant conservative knuckle draggers. What's the point?
The oil industry, leave California? Are you serious? Taxed too much, Chevron???
I don't know why I spend so much time educating (which is actually impossible to do with you people) and correcting all you disinformation spreaders here, but I guess I just have thing about ignorance that gets my blood going.
Thankfully, there was a detailed op-ed published on this site awhile back about the facts of an oil severance tax and California versus the oil industry lies (or the lies from the above "Bill"). Here's a few key sections (http://www.californiaprogressreport.com/site/refuting-oil-industry-lies-...):
California is the only oil producing region on the planet where the Oil Companies get away without paying some form of what's called a severance tax, a royalty paid for the right to "sever" natural resources from the land. Even oil taken from under federal waters off the California coast is subject to an 18.75% federal royalty, but in California’s territory - nothing.
Oily Lie #1: California oil companies already pay their "fair share" of corporate taxes and property taxes, and adding an additional severance tax would make it the highest taxed oil in the U.S.
Truth: California oil companies pay less than the nominal state corporate tax rate, their property taxes are limited under Prop 13, and Alaskan oil is and will remain the most highly taxed oil in the U.S. Under Gov. Sarah Palin, Alaska instituted a "highly progressive" Oil Profit Tax beginning at 25%, plus a 2% property tax.
Details:
Corporate Taxes: Every corporation in California is obliged to pay state corporate tax at the nominal rate of 8.84%. In practice, after deductions and write-offs most taxpayers, including corporations, pay less than the nominal rate, which is known as the effective tax rate.
Forensic accounting analysis to determine what effective rate the Oilies are paying California is extremely difficult because tax records are private information. The best attempt to unpack the public record is by author and activist Antonia Juhasz who in her book The Tyranny of Oil estimates Chevron's effective state tax rate for 2007 at just under 8.0%.
But paying corporate taxes like the rest of us is irrelevant. The real issue is that the Oilies should pay a royalty for the depletion of a scarce, irreplaceable natural resource - just like they do everywhere else in the world.
Property Taxes: All property taxes in California are limited under Prop 13, including oil-bearing properties. As UC Riverside economist M. Mason Gaffney points out, county assessors staff can't or won't keep current with fluctuations in the price of oil, so their assessed taxable property value is far below the true market cost. Also, property taxes on oil reserves accessed by leasehold are mostly based on the improved value of the land (if there's any building on it) and are paid by the owner of any such property, not by the oil company depleting the underground resource. Again, the point is to make the oil companies pay for the depletion of our natural resources, just like they pay in Texas.
Most tax "burdened": Alaska's oil taxes as a percentage of oil company revenue dwarf the proposed California oil severance tax. Under Governor Sarah Palin and a majority Republic legislature, Alaska levied a "highly progressive" oil production profit tax that begins at 25% and increases with the market price of oil, plus an additional Oil and Gas Property tax of 2%. Oil-related revenue from fees and taxes funds 90% of Alaska's treasury, including an annual oil revenue share check for every Alaskan citizen. Here's a link to Sarah Palin explaining how increasing Alaska's tax on oil promotes job growth and stimulates the Alaskan economy."
And of course, oil companies are raking in RECORD PROFITS while paying less in proportional taxes than a poor family...and they're destroying the planet.
As the article notes, "Now, in California’s hour of deepest need, when every dollar counts, the Oilies don’t care about the damage their lavish tax break is doing to California. They don’t care if teachers, cops, and firefighters get laid-off, if kids drown in backyard swimming pools because the closest fire station is “browned-out”, if the cost of a public college education in California prices worthy students out, or if cuts to the L.A. County Civil Courts will depress the economy by $30 billion.
Here’s the bottom line: the Oil Companies don’t want to pay taxes, they want YOU, the consumer to pay taxes for them."
Every other similar talking point like the above from Bill designed to protect oil industry profits at the expense of the planet and human life are also detailed in the piece.
Let's not forget too...corporations in California are now paying a fraction of the tax share they did just 30 years ago (meaning more has shifted to people)...and have received one huge tax cut after another in just the past 20 years.
CALPIRG recently did a study showing that 280 consistently profitable Fortune 500 companies paid about half the statutory corporate tax rate while spending $2 billion to lobby Congress on tax policy and other issues. Twenty-nine of these corporations actually received a net tax rebate simply by exploiting special provisions and loopholes in the tax code. Oil companies are as big and powerful as you get...and energy companies littered this list.
So please...educate yourself...understand what's at stake if we don't raise revenues on those with ALL THE WEALTH and do all the damage to the planet. It's either companies like Chevron pay more, or its you and I paying more...or, its continuing to cut education to the bone (look at your remark to see the detrimental effects of that), gut public safety, de-fund infrastructure...and continue the austerity march towards third world land.
Take two things you *think* are facts, cobble them together in a post hoc nightmare of an argument and put it on the internet.