Sucker Punched? SHORT & SWEET... BUT, IT IS A GREAT EXAMPLE OF the Feds' SKILL...
It seems like a miracle that our government was able to convince BP to establish a $20 billion slush (oops, escrow) fund to compensate those hurt by the ongoing oil plume in the Gulf of Mexico. After all, the govt had no constitutional power to force them to do so; so had to resort to Mafia-style negotiating. But, let us take a closer look at the effect on BP’s finances: 1. BP will establish a $20 billion fund, but will pay only $7 billion into it during 2010. 2. BP is a British corporation, but has a very large operating entity in the US but only about 30% of its income is derived from the US. 3. By Generally Accepted Accounting Principles (GAP), BP must book the entire $20 billion expense in the year accrued. Therefore, they will book a $20 billion expense in 2010, reducing their US tax liability by $7 billion. 4. Our dear US gubmint also convinced this massive corporation to show their concern for the “small people” by withholding dividends to their shareholders for the last 3 quarters of 2010. This reduces their outward cash flow by about $7.5 billion, including approximately 40% of that amount to US citizens. Assuming that the Bush tax cuts will survive through 2010, the US Treasury will lose another $450 million in taxes on that amount. We won’t even discuss the effect on the US economy. Let us put the results into a list easily understood by the small people (including me): BP Cash Flow: O Escrow funding ($7 billion) O Dividend saving $7.5 billion O Tax savings $7 billion O Net favorable cash flow : $7.5 billion US Treasury Tax Receipts: O BP Corporate income tax ($7.5 billion) O BP Shareholders ($0.45 billion) O Net unfavorable tax receipts ($7.95 billion) I guess we really should expect this. After all, our dear leader is the most inexperienced man in ANY room he enters. Now tell me …………………Did the Gubmint “Kick Ass,” or did it get ”Sucker Punched”? Bottom line: The $20 Billion BP is putting up will create a $7.5 Billion positive cash for BP flow this year. But, the Feds actually “think” they really did something special and “kicked ass.’ In reality, BP executives are laughing at him and ‘kicked his ass.” The government is in over its head when it starts dealing with “business people.” -- You received this message because you are subscribed to the Google Groups "WebTV Dawgs/Dittos" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/webtv-pals?hl=en.
