Will BP enjoy a long tax holiday?

[mendeleev 68]

This information is gleaned from a front page article of Tuesday's (13 July) Financial Times.

BP may not need to pay Uncle Sam any taxes for a few years, because of the oil spill. If BP manages to seal the hemorrhage by August, Financial Times reckons that BPs total spending in the gulf could be about $30 billion. About $10 billion would represent cleanup costs and $20 billion compensation suffered by fishing, tourism, and other damaged industries.

BP believes they can deduct these costs from taxable earnings. With a 30% tax rate on profits -- a good estimate globally -- BP would have roughly $10 billion it could deduct.

BP paid $8.4 billion globally in taxes last year. Of this, 930 million pounds went to the British treasury and it is thought that the Feds got a similar amount: maybe $1.5 billion.

With $10 billion to deduct, if BP plays it smart, and Uncle Sam went along, maybe they won't have to pay taxes for four years and, in effect, the US and UK taxpayers will subsidize BP's recklessness.

BP's share price is going up. With a 4-year tax holiday in sight, there's no reason why it shouldn't.

I imagine there are folks here who think these sort of tax breaks are the way things should be.

[Gary and Alla 3,694]

I believe NO business should pay ANY tax...EVER, for ANY reason.

Businesses pass their taxes on to either employees, shareholders or customers. Businesses do not PAY tax (no matter what you may imagine) businesses COLLECT taxes and pass them on to the government. Put a tax on cigarettes (oh, they have already done that) and see who pays it. Put a tax on soda...they tried that too, and see who pays it. Put a tax on anything and it will passsed from the business to the consumer, employee or shareholder in increased prices or reduced dividends or pay, and collected from individuals. Individuals pay tax, businesses do not.

The problem is not that BP will get a tax credit, the problem is that other oil companies will NOT. The government collects about 45 cents per gallon on gasoline, more "profit" than the oil company makes, but that is OK by you? (And that does not include state tax) There very well could be more than $1 per gallon YOU are paying in tax (depending on your state) Would you be happy if gasoline went down in price $1 per gallon?

Put another way...if our government did not FORCE BP to collect tax from US to pay to the government, we would have lower gas prices and YOU would not be whining that BP was getting a tax cut AND BP would have to pay for the oil spill "out of their own pocket"

[spookyturtle 9,465]

The Federal tax on gasoline is 18.4 cents per gallon. State taxes range from a low of 8cpg in Alaska to 32.1cpg in Wisconsin. We the consumer pay these taxes to our state and federal gov. and supposedly get many things in return.