There’s a tax angle to everything–including the DeepWater Horizon oil spill
by Linda Beale
crossposted with Ataxingmatter
There’s a tax angle to everything–including the DeepWater Horizon oil spill
There’s a tax angle to everything–including the DeepWater Horizon oil spill
Oil is still pouring out into the Gulf ocean from the well head of the DeepWater Horizon. The entire gulf is beginning to look like an oil slick, as we learn that oil companies like BP, rig owners like TransOcean, and contractors like Halliburton (the cement plug provider in the Gulf spill) never bothered much abouit preparing for potential disasters–especially not spending money to research solutions to potential catastrophes. Quelle surprise!
There are lots of tax benefits for natural resource extraction–many that we should eliminate asap, if we are serious about preserving the environment and moving on to less destructive sources of energy (while activating our economy with real production instead of the financialization, and creating jobs, preventing reliance on middle East oil–all at the same time).
Senator Grassley wants to know just what the tax benefits and subsidies for the major contractors in the spill have been. See Grassley letter to chair of BP, May 17, 2010, asking for an accounting of all tax breaks/subsidies and royalty relief from 2005 to the present and what benefits, tax and otherwise, are received by DeepWater Horizon’s operating under the flag of the Marshall Islands; Grassley letter to chair of TransOcean, May 17, 2010, asking for the same information about TransOcean and information about its other rigs operating under foreign flags (and who made the decision to replace mud with seawater, leading to the explosion, among other things) .
Sounds like a good line of questioning to pursue to me. When we see the greed-centered decision-making of companies like BP and TransOcean, we should see as clearly as possible the way we’ve provided tax expenditure “handouts” to them over the years. Welfare for corporations is a growing item in our budget–that will likely be added to by the “extenders” bill under consideration at this time in Congress.
Grassley also is seeking full information on the Minerals Management Services lax regulatory effort. Not surprisingly, this agency absorbed the lesson of four decades of deregulatory thinking quite well, as evidenced by the “sex for leases” scandal a few years back. See Grassley’s letter to Salazar seeking accountability from the agency (May 17, 2010). A similar letter to Halliburton seeks information on the cement and the regulatory oversight of its use. See Grassley letter to Halliburton, May 17, 2010.
Linda
You seem to be down on depletion allowances and such. And that may be fine. But before we go charging into the tax code swinging machetes, we probably need to completely understand the consequences of that act. My concern is that the US has a huge and persistent Balance of Payments/Current Account deficit. One of the few things we export is natural resources. I’m personally convinced that we need to discourage imports and encourage exports. My fear is that some depletion allowances are (well hidden) export subsidies and that removing them will exacerbate our already huge trade problem.
VtCodger,
Yes, hadn’t thought of it that way. Though to broaden the thought further, what we are exporting via private enterprise is the peoples natural resourses. The arrangement by which we do allow this has been sited as a textbook example of corp welfare.
Well, we aren’t exporting oil. Natural gas flows both ways at the Canadian border but is a net import to the US and we probably have a small net export to Mexico.
Good luck tilting at the windmills of port state versus flag state control. That’s been tried so many times and that dog just won’t hunt.
Transocean will undoubtedly pay far less of a tax bill to the Marshall Islands that it would were its assets registered in the USA. It could have just as easily been flagged in Panama, Costa Rica, the Bahamas, or Macau. As long as it is operating in international waters (more than 12nm from land), it can be flagged more or less wherever it wants and go where it wants.