Re: ExxonMobil’s ITEP Application #20230071-ITE, Part I
Baton Rouge Metro Council Meeting, September 27, 2023
On September 27, 2023, the East Baton Rouge Parish Metro Council approved an application for the Industrial Tax Exemption Program from ExxonMobil Corporation for a project in East Baton Rouge Parish.
The application appeared on the Metro Council’s agenda as item 88 [23-01171]. According to Exxon’s application, “this project will install facilities at existing Baton Rouge Complex to allow processing of plastics not currently able to be mechanically recycled.” The investment amount listed on the application is $76,620,500. That amount appears to be considerable, but it’s important to note that the investment is not in publicly-owned infrastructure or additional jobs. The project would create no new jobs. How it might affect air or water quality isn’t clear. There was no indication in the application that an environmental impact study had been required or performed. Though it is mentioned that some of the new equipment will include “processing equipment to breakdown used plastics to native materials for reprocessing into new light weight durable plastics,” there is no discussion of the possible emissions which will result.
In exchange for this project, Exxon requested a tax exemption in the amount of $8,612,688.26 over 10 years or approximately $861,269 per year. The application also notes that the total property taxes paid in the most recent year at the site in question was $14,598,412. If that amount is typical each year, this exemption would decrease Exxon’s property tax liability for the site in question by 5.9% annually for the next 10 years.
Public testimony is limited to three minutes, too short a time to fully delineate the numerous reasons why this application should have been denied; however, I attempted in that time frame to explain at least one reason why this application, like others by Exxon, was not only unjustified. It was absurd. To do this in three minutes is a challenge, so I will provide additional information in footnotes when it seems warranted.
Only three people, myself included, spoke in person on this item at the Metro Council’s September 27th meeting. A representative from the Baton Rouge Area Chamber spoke in support. On behalf of Together Baton Rouge and herself, Jennifer Carwile spoke in opposition. I spoke. One person submitted via email a comment in opposition to the proposed exemption. In response, Councilperson Aaron Moak made a motion to approve. It was seconded by Councilperson Brandon Noel. There was no objection, so there was no discussion and the tax exemption was approved without a vote. In other words, this tax abatement was effectively approved unanimously by the Metro Council as all members were present, including the two members currently running for the state legislature: Chauna Banks of Metro Council District 2 and Laurie Adams of District 11.
THEY’RE BACK: EXXON, ITEP, 2023 EDITION
Exxon made $56 billion dollars in profit last year.1 Record-setting.2
And yet here they come again asking the people of East Baton Rouge Parish to grant yet another tax abatement.3 Remember, in 2021 the Metro Council granted Exxon a $23 million dollar tax abatement over 10 years, so that one is still going on.4
Exxon claims or implies that they are generous to this community. They are not.
Let’s look at their financial documents:
According to this application, the total property taxes paid in the most recent year for the site in question was: $14,598,412.5
Exxon’s request for this abatement implies that’s just too much money for them to pay in taxes to the people in this parish.6
But let’s put that amount into perspective.
Do you know the total compensation package in the most recent year for Exxon’s CEO? $35,950,331.7
Almost 36 million dollars. In one year. To one person.
And yet Exxon claims they can’t afford to pay $14 million dollars to the people of EBR parish.
It’s immoral.
But Tania, you don’t understand. Exxon pays its employees more and then they spend more money in the parish and that generates tax revenue.
Really? Let’s look at a couple Proxy statements.
In 2017, Exxon’s CEO’s compensation package was $17,495,119 dollars.8
The median of the annual compensation of all other Exxon employees was $161,562 dollars.9
108:1. The CEO made 108 times more than the median employee in 2017.10
In 2022, as I mentioned before, the CEO’s compensation was nearly $36 million dollars. More than double the amount from 2017. You’d expect the compensation of the median employee to double, too, right?
Wrong.
The median of the annual compensation of all other Exxon employees in 2022 was $171,582 dollars.11
Five years later, profits are doubled, CEO compensation is doubled, and the median compensation of all other employees is only $10,000 dollars more. I don’t think that even adjusts for inflation.
The ratio is now 210:1. Exxon’s CEO makes 210 times more than its median employee.12
It is immoral.
But Tania, Exxon pays so much in taxes to the U.S.
Not really. The taxes Exxon paid to the U.S. in 2022 was 8% of revenue generated in the U.S. The taxes they paid to other countries—15% of non-U.S. revenue. Almost twice as much.13
And they’re still doing business in those countries and they’re still investing heavily in those countries.14 They don’t, as their lobbyists claim, scrap projects or leave.
They will pollute our air and drain our aquifer15 so we will soon have to drink from the Mississippi. But they will never on their own volition pay the people of this parish fairly.
Exxon is not our benefactor. They are our abuser. And we are suffering from a corporate Stockholm Syndrome if we think otherwise. It is long past time for us to learn a sense of self-worth and demand Exxon treat us fairly.
Do the right thing for the people in this parish. Vote No.
ExxonMobil Corporation. (2023). Form 10-K. Retrieved from https://ir.exxonmobil.com/node/34656/html. “Notes to Consolidated Financial Statements,” p. 112.
Domonoske, Camila. “Exxon announced record earnings. It's bound to renew scrutiny of Big Oil,” National Public Radio: Business, 31 Jan 2023. https://www.npr.org/2023/01/31/1152776315/exxon-mobil-earnings-chevron-big-oil-biden-windfall-tax
Lussier, Charles. “ExxonMobil tax break request moves ahead,” The Advocate, 19 Feb 2021, (1B).
Nyman, Tania. “February 24, 2021: In response to Exxon Mobil Corporation’s ITEP Application #20200425-ITE,” 27 Feb 2021. https://www.tanianyman.com/post/february-24-2021-in-response-to-exxon-mobil-corporation-s-itep-application-20200425-ite.
Property Tax. Industrial Tax Exemption Program Application, Project ID: 20230071-ITE, 3 May 2023, p. 4. Also available at: https://hdlegisuite.brla.gov/attachments/2023/Exxon%20Mobil%20Corp%2020230071-ITE%20Application_D9B5C7CA.pdf
As Exxon’s ITEP application clearly states, $14,598,412 is the “Total Property Taxes paid (most recent year for this site)” [emphasis added]. It is not the amount of the requested tax exemption. Exxon applied for an $8,612,668.26 tax exemption over 10 years. Or approximately $861,269 per year for 10 years. In other words, Exxon essentially asked that their annual $14 million property tax bill for this site be reduced by $861,269 per year, the implication being that $14 million is just too much for them to pay in taxes to the people in East Baton Rouge Parish.
I couldn’t explain this nuance within the 3-minute time limit, but I think it’s worthwhile to note that in my opinion the more modest amount reveals that this tax exemption request by Exxon is even more unconscionable. $861,267 is an insignificant amount to a corporation that made $56 billion in profits in 2022. (Less than .002% in fact.) I’d even argue that $861,267 isn’t especially significant to a CEO who earned nearly $36 million in one year. It’s a mere 2.4% of his 2022 compensation.
Time and time again Exxon representatives claim that the corporation is paying a generous amount of taxes to the people in East Baton Rouge Parish. However, that claim fails to acknowledge that the amount Exxon pays in taxes to EBR is an insignificant share of Exxon’s total revenue. Is it a significant share of the revenue generated by the Baton Rouge Refinery? In order to determine the answer to that question, one needs to know the amount of revenue generated by the Baton Rouge Refinery, and that information is not available in Exxon’s 10-K or in the one-page document produced by Exxon which I was given following the Metro Council meeting.
ExxonMobil Corporation. (2023). Proxy Statement. Retrieved from https://ir.exxonmobil.com/node/34696/html. “Pay Ratio,” p.106.
ExxonMobil Corporation. (2018). Proxy Statement. Retrieved from https://ir.exxonmobil.com/node/15326/html, “Pay Ratio,” p.60.
Ibid
Ibid
ExxonMobil Corporation. (2023). Proxy Statement. Retrieved from https://ir.exxonmobil.com/node/34696/html. “Pay Ratio,” p.106.
Ibid
The actual percentages are slightly more damning than what I read at the Metro Council meeting. Exxon generated approximately $149.2 billion in U.S. revenue (ExxonMobil Corporation. (2023). Form 10-K. Note 18 (Geographic: Sales and other operating revenue) to Consolidated Financial Statements, p.113).
It paid to the U.S. approximately $12.1 billion in total taxes—income, other taxes, and duties (ExxonMobil Corporations. (2023). Form 10-K. Note 19 (Income and Other Taxes) to Consolidated Financial Statements, p.114).
$12.1 billion is approximately 8.1% of $149.2 billion.
Exxon generated approximately $249.5 billion in Non-U.S. revenue (ExxonMobil Corporation. (2023). Form 10-K. Note 18 (Geographic: Sales and other operating revenue) to Consolidated Financial Statements, p.113).
Exxon paid approximately $39.5 billion in total taxes to countries outside of the U.S., (Non-U.S. tax expense). (ExxonMobil Corporation. (2023). Form 10-K. Note 19 (Income and Other Taxes) to Consolidated Financial Statements, p.114).
$39.5 billion is approximately 15.8% of $249.5 billion.
The percent of revenue (15.8%) Exxon pays in taxes to Non-U.S. countries is nearly twice the percent of revenue (8.1%) it pays in taxes to the U.S.
It’s worth noting that Note 19 to Exxon’s Consolidated Financial Statements also includes a section entitled “Additional European Taxes on the Energy Sector.” In 2022, the European Union Member States adopted a new regulation which imposed a mandatory tax on Exxon and other petrochemical companies which “resulted in an after-tax charge of approximately $1.8 billion to the [Exxon] Corporation’s fourth-quarter 2022 results.” The European Union did not grant tax abatements to Exxon or other companies in the energy sector. They imposed a new mandatory tax. The Metro Council’s decision to grant Exxon additional tax abatements in such a climate not only appears to be unnecessary. It suggests an inability or unwillingness to advocate responsibly on behalf of the people in East Baton Rouge Parish.
ExxonMobil Corporation. (2023). Form 10-K. Retrieved from https://ir.exxonmobil.com/node/34656/html. “Capital and Exploration Expenditures,” p.67.
Save Our Water campaign. Louisiana Environmental Action Network. https://www.saveourwaterbr.com/