Cleaning Out The Abuses Of Welfare - Starting With Oil Subsidies

With all the hot air coming from the noise machine that is essentially the Republican party about "welfare" recipients and those on "unemployment" being pariahs that live off the taxpayer government money, and their hyper exaggerated need to rid them from the government "tit," so to speak, I say we start with getting rid of those fat cat corporations on welfare, you know, the ones that REALLY drive the Cadillacs and Rolls Royces.

Transocean, the company that owns the failed Deepwater Horizon rig that caused the Gulf oil spill, used well-known tax havens in the Cayman Islands and Switzerland to lower its U.S. corporate tax rate by almost 15 points. And due to a break in the U.S. tax code, BP was also allowed to write off the rent it paid to Transocean on its own tax bill, saving it hundreds of thousands of dollars per day:

The owner, Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008, maneuvers that also helped it avoid taxes. At the same time, BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.

So, essentially, the U.S. taxpayer paid BP to lease a rig that was incorporated in a foreign country for the purpose of avoiding the U.S. corporate tax. And the U.S. tax code is actually riddled with breaks for the oil industry, despite that industry’s record profits in recent years. Center for American Progress Senior Policy Analyst Sima Gandhi has counted nine different subsidies that the U.S. government gives to the oil industry, including refunds for drilling costs and refunds to cover the cost of searching for oil. If this corporate welfare were cut, it would save $45 billion per year, and according to the Office of Economic Policy at the Department of Treasury, “affect domestic production by less than one-half of 1 percent.” “The flow of revenues to oil companies is like the gusher at the bottom of the Gulf of Mexico: heavy and constant,” said Sen. Robert Menendez (D-NJ). “There is no reason for these corporations to shortchange the American taxpayer.”

Take that in with your morning cup of java and come back to me with a good retort!

H/T to Think Progress.