It Ain't Fair

Corporate America is shutting average Americans' voices out, while they help themselves to taxpayer dollars. The economic playing field is tilted against the middle class — and we have the power to change that.

bad government politics Taxes

B.P.’s Gulf oil spill got them a $61 billion fine with a $17 billion tax break-When fines are tax-deductible, taxpayers get screwed.

A 3 minute read.

On April 10, 2010, B.P.’s Deep-water Horizon rig had a blowout a mile underwater. The rig caught fire and eventually sank. The well leaked for 87 days, pouring 3.2 billion barrels of oil into the Gulf of Mexico. A barrel of oil contains 42 gallons, so 133,980,000 million gallons of oil spilled into the Gulf.

Why did the blowout happen?

The rig lacked a device known as an Acoustic Control. That would have been a safeguard of last resort. Many oil-producing nations use it, and its effectiveness is debated. These controls cost $500,000. U.S. regulators were considering making them mandatory in deepwater drilling, but industry objections won out.

Not enough cement was used at the bottom of the borehole, so oil and gas started leaking into the pipe that rose to the surface. Moreover, a “cement log” should have been performed to test for a good cement seal, but it was not.

Two valves failed that should have sealed the pipe from gas rising to the surface.

The rig had an onboard gas detection system, but the system failed.

Some instruments that pointed to possible trouble were misinterpreted.

Many small mistakes caused this spill, and speed was prioritized rather than safety, demonstrating that big companies don’t always do the right thing.

What was the cost?

The total fine that B.P. paid was $61.5 billion. The tax deduction was $17 billion. Assuming a tax rate of 35%, which is probably high, they got about a $6 billion tax break.

To put that in perspective, the 2017 federal budget for the Children’s Health Initiative Program (CHIPS), which covers poor kids in America, was $15 billion. In other words, the B.P. tax break represents a whopping 40% of the CHIPS budget. Guess who picked up the slack? We taxpayers.

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