Chesapeake Has Paid 1% Income Tax Over Company's History
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| Obama's has attempted and failed to end fossil fuel subsidies |
Chesapeake Energy Corp. (CHK) made $5.5 billion in pretax profits since its founding more than two decades ago. So far, the second-largest U.S. natural-gas producer has paid income taxes on almost none of it.
Chesapeake paid $53 million over its 23-year history, or about 1 percent of the cumulative pretax profits during that period, data compiled by Bloomberg show. That’s less than half of Chief Executive Officer Aubrey McClendon’s compensation, for example, in 2008 alone.
The company and other U.S. oil and gas producers can thank a century-old rule that allows them to postpone income taxes in recognition of the inherent risk of drilling wells that may turn out to be dry. The break may be outdated for companies such as Chesapeake, which, thanks to advances in technology, struck oil or gas in 99.6 percent of its wells last year.
“To the extent the world is a different place than it was when the policy was first devised, that’s a powerful reason to revisit the need for this subsidy,” said Edward Kleinbard, a former chief of staff on the congressional Joint Committee on Taxation who now teaches at the University of Southern California in Los Angeles.
While Oklahoma City-based Chesapeake is the biggest U.S. oil and gas producer with such low tax payments, it’s far from alone, according to the data that calculated several companies’ so-called long-run cash effective tax rates. Range Resources Corp. (RRC) paid income taxes of about 0.4 percent of pretax income over the past decade, the data show. Southwestern Energy Co. (SWN) paid 2.1 percent and EQT Corp. (EQT) paid 5.3 percent, the data show.
The U.S. corporate income tax rate is 35 percent.Read the rest of the article here.
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