The feds have shaken BP down for $20 billion to pay for the Gulf cleanup, and they're looking to impose an industry-wide tax toward the same end—which is giving the industry fits. But it's worth noting, reports the New York Times in a detailed examination, that oil is one of the most subsidized industries going. The Deepwater Horizon, the Times notes, was flying a tax-dodging Marshall Islands flag when it blew skyward, and BP was claiming US tax breaks on up to 70% of the rig's rent.
Capital investments related to oil production are taxed at an effective rate of 9%—normal industries are around 25%—and many oil companies make more profit after tax than before, subsidies that run the federal government some $4 billion a year. That's cheap for the low gas prices and 9.2 million jobs involved, industry execs say, but NJ Sen. Robert Menendez, who's looking to cut that number by $20 billion over the next 10 years, isn't buying it: “There is no reason for these corporations to shortchange the American taxpayer.”