The Washington Post is reporting that BP is claiming a $10B tax credit because of damages suffered due to the oil spill. How can this happen? That’s American tax code for ya.
Under current law, companies can take a tax credit on up to 35% of their losses. It explains why a company such as GE paid no U.S. income tax in 2009 after reporting $408M in losses.
If BP gets this tax credit, the company will receive from the government half of the money it has promised to set aside in an escrow fund.
Let’s examine the reasons for such a counter-intuitive tax law. According to The Washington Post:
Policymakers crafted the tax code this way so that companies can spread their profits and losses over more than just a calendar year. Let’s say a company earns $100 billion one year and pays the U.S. corporate tax rate of 35 percent, or $35 billion. The next year, the economy goes south, and the company loses $100 billion. Over those two years, the company earned zero dollars, but it still paid $35 billion in taxes.
Here’s a better (and likely more accurate) explanation: Congress wrote the tax code this way because companies like BP and GE told lobbied them to do so. Congress ignored all merit because it is flooded with money from major corporations.
This is just another example of corporate money polluting politics. Taxpayers should not be paying for BP’s mistakes.
Congress needs to step up its game and take away power from corporations. DISCLOSE would have been a good first step (and still can be!). That legislation has thus far failed because Republicans stopped it from reaching the floor. Do Republicans actually dislike transparency in government? Not if John McCain of 2008 can be believed. He said,
Accountability and transparency are the pillars of essential reform.
Yet he and his colleagues voted against both accountability and transparency when they voted against DISCLOSE. Why? Because Republicans are set to be given billions of dollars in campaign finance this fall. Who will donate the money? Corporations will. And because of Citizens United, they can.
Corporations must not continue to run our government. Sign some of the following petitions and fight corporate power with us.