Corporatism Fact of the Day, Big Oil Edition

You may have heard about some oil spill from some British company in the Gulf of Mexico, and you may have heard that some Republicans feel bad for said company.  Did you also know that our government provides Big Oil with billions of dollars of subsidies every year?

The New York Times today ran a ghastly article detailing the extent of our corporate ideological control.  The federal government has raised the idea of adding a tax to oil companies that would go into a fund to pay for environmental cleanups, and oil companies are naturally, like most big businesses, fighting this profit-reducing measure.  (Of course, it’s standard neoclassical economic wisdom that companies must internalize all costs, such as environmental pollution, for a market to run properly.  In other words, Republicans embrace economic lessons only when it benefits their corporatist agenda.)  For example, BP was able to write-off 70% of the cost of its rental of the Deepwater Horizon.  After tax breaks, oil companies pay, on average, 9% of profits as tax; the statutory rate is 25%.

Remember, tax breaks are just subsidies.  This spectrum of Big Oil subsidies costs the government approximately $4 billion per year (and you’re not going to see Jon Boehner cutting this government spending anytime soon).  Companies also have a tendency to put a few secretaries in friendly jurisdictions and call that place their headquarters.  Without eliminating tax subsidies, there is no way we are going to balance our budget and beat our obsequiousness to Big Companies.

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