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Comment by skywal_l | Hacker News Reader

His point is that fines are tax deductible. It's logical from an accountant point of view, but indeed absurd from a human point of view.

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The article points out that fines are not tax deductible and gives the other example of BP and Deepwater Horizon

> But such write-offs are legal, qualifying as “ordinary and necessary” business expenses. By contrast, fines and penalties are not deductible. Oil giant BP was able to deduct most of the settlement it reached with the government over the Deepwater Horizon spill because much of it went to address the environmental calamity, rather than to penalties for wrongdoing.

And the other points in the article are the trust that was set up and the expenses for cleaning up the spill were what was deducted on taxes but they seemingly did not actually do anything to clean it up.

> In 2012, the Coast Guard finally ordered Taylor to install a dome to contain the leak, but three years later, when Taylor Energy settled a lawsuit that forced it to start publicly disclosing more about its efforts, the company had not even finished the design.

They are damages so, indeed, it is unfair to compare them to fines, as all damages are tax deductible. I stand corrected.

I am not trying to claim that the situation is illegal, merely that it is immoral (thus the human part). Putting aside the laws and codes, paying to fix a situation that you created through negligence should not be a normal business expense IMHO.

I resent the idea that you can pay you way out of almost all situations unless the victim is richer than you.

Is it absurd from a human point of view? 'Tax deductible' means lowering your taxable income because you incurred certain expenses. It's not just a free tax write off.

The absurdity is in its dampening of the (ostensible) punishment: you shouldn't be rewarded with a tax deduction for performing an incredible amount of pollution. Instead, you should be both fined and taxed.

It's definitely absurd that you lower your tax basis (i.e. the gains/income-based maintenance obligation we all have to keep the country running) because you paid a fine to offset an externality (which is a cost above, beyond, and unrelated to the maintenance cost of the country).

Yes it is absurd because destroying the environment should not be considered a business expense.

When a cab is fined for speeding, he cannot claim it as a business expense. He put lives at risk and that is not a reasonable business decision. It should be the same for oil spills.

But guess what, tax codes are not written by taxi drivers...

It's absurd that a fine reduces your taxable income. It has very little impact on low-income people, but quite a high one if you're rich.

The argument is that someone rich enough can deduct fines from their tax, but a poorer person can deduct the speeding ticket from their tax. They will also not be able to deduct the lost salary for being locked up from their future tax bill. So this clearly creates an imbalance, rich and poor are treated differently before the law.

Expenses just reduce your net income. It costs money to cleanup an oil spill.

The fines, afaik, are not tax deductible and are paid after calculating taxable income.

This is true for any business, but I don't get why oil gets singled out by people describing this type of accounting as oil companies getting a government subsidy. It just means expenses were higher, so net income and profit are lower, which is the amount you pay taxes on.

It's not that complicated.

Now if the government pays for part of the cleanup, and for some reason that amount is forgiven for whatever reason (maybe as part of a settlement), then that forgiven debt is considered taxable income.

It's standard businesses accounting, whether oil company or any other type of business.

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