Friday, July 30, 2010
BP plans to write off nearly $10 billion in oil spill expenses when it pays its corporate taxes to the federal government—an amount that’s about half of what it pledged to spend to help victims living on the gulf coast. In its latest earnings report, BP states that it will eventually lose $32.2 billion in damages, business claims and cleanup costs because of the spill. U.S. tax law allows corporations to take credits on 35% of their losses.
BP is assuming that the government will not find it guilty of “gross negligence,” which would raise its penalty from $1,100 a barrel of spilled oil to $4,300 a barrel. The total amount of oil that has spewed into the Gulf of Mexico is still a matter of mystery and contention, but is roughly estimated to be around 4,500,000 barrels.
The tax deduction would mean “taxpayers will indirectly foot part of the bill for the $20 billion fund that BP established to compensate people and businesses harmed by the disaster,” according to The Washington Post. The write-off would almost equal what BP paid in taxes last year to all governments worldwide.
-David Wallechinsky, Noel Brinkerhoff
BP to Cut U.S. Tax Bill by $10 Billion Because of Losses in Gulf Spill (by Jia Lynn Yang, Washington Post)
BP Seeks Tax Cut on Cleanup Costs (by Neil King Jr., Wall Street Journal)
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