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Thread: Governments Moving to Cut Spending, In Echo of the 1930's

  1. #21
    Havakasha is offline
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    Other tax breaks were born of international politics. In an attempt to deter Soviet influence in the Middle East in the 1950s, the State Department backed a Saudi Arabian accounting maneuver that reclassified the royalties charged by foreign governments to American oil drillers. Saudi Arabia and others began to treat some of the royalties as taxes, which entitled the companies to subtract those payments from their American tax bills. Despite repeated attempts to forbid this accounting practice, companies continue to deduct the payments. The Treasury Department estimates that it will cost $8.2 billion over the next decade.
    Multimedia.Over the last 10 years, oil companies have also been aggressive in using foreign tax havens. Many rigs, like Deepwater Horizon, are registered in Panama or in the Marshall Islands, where they are subject to lower taxes and less stringent safety and staff regulations. American producers have also aggressively exploited the tax code by opening small offices in low-tax countries. A recent study by Martin A. Sullivan, an economist for the trade publication Tax Analysts, found that the five oil drilling companies that had undergone these “corporate inversions” had saved themselves a total of $4 billion in taxes since 1999.

    Transocean — which has approximately 18,000 employees worldwide, including 1,300 in Houston and about a dozen in Zug, Switzerland — has saved $1.8 billion in taxes since moving overseas in 1999, the study found.

    Transocean said it had paid more than $300 million in taxes so far for 2009, and that its move reflected its global scope, with only 15 of its 139 rigs located in the United States. “Transocean is truly a global company,” it said in a statement.

    Despite the public anger at the gulf spill, it is far from certain that Congress will eliminate the tax breaks. As recently as 2005, when windfall profits for energy companies prompted even President George W. Bush — a former Texas oilman himself — to publicly call for an end to incentives, the energy bill he and Congress enacted still included $2.6 billion in oil subsidies. In 2007, after Democrats took control of Congress, a move to end the tax breaks failed.

    Mr. Menendez said he believed the Gulf spill was devastating enough to spur Congress into action. But one notable omission in his bill shows the vast economic reach of the industry. While the legislation would cut many incentives over the next decade, it would not touch the tax breaks for oil refineries, many of which have operations and employees in his home state, New Jersey.

    Mr. Menendez’s aides said the senator thought it was legitimate to allow refineries to continue claiming a manufacturing tax credit that he wants to eliminate for drillers because refining is a manufacturing business and because refineries do not benefit from high oil prices. Mr. Menendez did not consult with New Jersey refineries when writing the bill, his aides said.

  2. #22
    SiriuslyLong is offline
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    Read it already. Knew it would be your soapbox of coorporate greed soon enough. So what is soooo different between Obama's stimulus for "everything" and the decision to promote oil dependency??

  3. #23
    Havakasha is offline
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    Just never heard you or john rail on billions wasted on oil dependancy and skipping out on paying taxes. Wonder why? LOL.

    Do you approve of Corporate waste? Just never heard you upset about anything but that scary govt of ours.

    Stimulus to help state governments retain teachers, police, fireman etc seems oh how should i say it, somewhat more postive. Not to mention stimulus to help businesses retain workers in general.

    I seem to remember there were more tax cuts in the stimulus package then people like me wanted.
    It seems that most economists think that those tax cuts were much less effective than direct stimulus.
    Last edited by Havakasha; 07-05-2010 at 01:19 AM.

  4. #24
    SiriuslyLong is offline
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    Quote Originally Posted by Havakasha View Post
    Just never heard you or john rail on billions wasted on oil dependancy and skipping out on paying taxes. Wonder why? LOL.

    Do you approve of Corporate waste? Just never heard you upset about anything but that scary govt of ours.

    Stimulus to help state governments retain teachers, police, fireman etc seems oh how should i say it, somewhat more postive. Not to mention stimulus to help businesses retain workers in general.

    I seem to remember there were more tax cuts in the stimulus package then people like me wanted.
    It seems that most economists think that those tax cuts were much less effective than direct stimulus.
    Corporate waste? Last time I checked, corporations had to compete, those that waste, fail. Corporations are also required to publish financial documents and are held to GAAP's. You see, they have stockholders that own the company. Now, you want to compare that to government? They can only guess at how much they owe to China, Japan and Germany.

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