Surprise, surprise. Transocean Execs Getting huge bonus for their "performance" 2010

[Fern]

You have obviously never looked at all for them, let alone very hard.

http://www.nytimes.com/2010/07/04/business/04bptax.html

But 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.

And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by var-ious credits. These companies’ returns on those investments are often higher after taxes than before.

I'm a tax CPA, and have worked on clients in the oil & gas industry.

In almost every case of claimed subsidies I've seen they are demonstrably nothing of the sort.

From the part you quoted:

the tax on capital investments

WTH is the (United State's) tax on "capital investments"?

I suspect this usual case of an authro of an article nothing nothing of what (s)he is wrinting about. Political drivel.

If it's referring to the capital gains tax (more specifically LTCG, which makes no sense to me) how the hell are oil & gas companies treated any differently than any person or other company, whether domestic or foreign? If they are not treated differently it isn't even possible to spin it into a subsidy.

The article is long on claims and short on specifics. It doesn't really even name any of these so-called subsidies.

Inatngible drilling costs and percentage depletion are the only two I have seen that could remotely be called subsidies, and those are doubtful for various practical reasons.

Here's my favorite part from the article:

Jack N. Gerard, president of the American Petroleum Institute, warns that any cut in subsidies will cost jobs.

“These companies evaluate costs, risks and opportunities across the globe,” he said. “So if the U.S. makes changes in the tax code that discourage drilling in gulf waters, they will go elsewhere and take their jobs with them.”

So....they can just go and find oil and get the legal rights to drill it anywhere else in the world that they choose if we don't keep giving them welfare?

Of course they used the standard "If you tax us or cut are welfare umbilical cord, it will cost good Americans their jobs" line too.

While this has absolutely zero to do with your contention of subsidies, yes, they can easily move operations elsewhere. Don't we all already know that's a big problem? It's called "outsourcing". You can outsource your supply as easily, if not moreso, as you can your employees. Look at any large oil & gas company, their operations are from all over the world. If/when the USA makes it hard to drill here do you really think they shrink up into a fetal ball and quit working? Of course not, they go where the business is - meaning elsewhere.

Our oil and gas companies were some of the first truly international businesses. They've going elsewhere for a very long time. Why or how could that change now?

Fern

 

[fskimospy]

Fern, think about what you're saying.

You think oil companies are going to move operations elsewhere? How would you suggest they do that? They drill where the oil is, not where the business climate is friendliest. Altering our system of subsidies would probably make oil production unprofitable in some areas that it's currently profitable, so maybe those few wells would go away, but the profitability of oil drilling has WAY WAY more to do with the price of oil on the international market than anything else. Tax rates on oil production are MUCH higher in many other countries than they are here, and yet the drilling continues.

If you were wondering what capital investment was, you could always have read the CBO study that the statement in that article was based off, and that the article included a link to. If you're going to accuse the author of not knowing what he's talking about, you'll have to accuse the CBO as well.

 

[Thump553]

I wouldn't worry about Transocean fleeing the USA, they did so a year or so before Deepwater Horizon.

They reincorporated as a Swiss corporation-probably to have proximity to the vast oil fields in the Alps.

 

[Londo_Jowo]

Our oil and gas companies were some of the first truly international businesses. They've going elsewhere for a very long time.

This is why I laugh when reading posts/blogs from the left concerning profits made by the major oil companies not being taxed in the US, the majority of the income/profits is from foreign sales/holdings and they pay taxes on these profits overseas. Yet the left thinks they need to be taxed again on profits that have already been taxed.

 

[fskimospy]

This is why I laugh when reading posts/blogs from the left concerning profits made by the major oil companies not being taxed in the US, the majority of the income/profits is from foreign sales/holdings and they pay taxes on these profits overseas. Yet the left thinks they need to be taxed again on profits that have already been taxed.

Interesting that you are endorsing a system of taxation where tax policy in Algeria affects how much tax a corporation pays in America.

You guys are more internationalist than you knew!

 

[Londo_Jowo]

So Oil companies that pay higher taxes plus foot the majority of the capitol for exploration in the joint ventures overseas should be taxed again in the US.