... an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process.
According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.
How bad does it get? According to a letter sent in June to the Senate Finance Committee, Transocean "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, in essence, you and I are picking up 70% of the tab for Transocean's drilling expense. Nice. In return for subsidizing the company's activities, "Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008" which helped it avoid taxes here in the U.S.
But, of course, in the name of free market capitalism, the oil industry will always say it doesn't want the government involved in it's affairs. They are rugged individualists, after all ...
- Mark
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