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Happy 100th Birthday, Big Oil Tax Breaks
Topic Started: Mar 2 2013, 12:23 AM (290 Views)
Brewster
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Climate Progress
 
Happy 100th Birthday, Big Oil Tax Breaks

Automatic across-the-board budget cuts will take hold on Friday, affecting job growth, state education programs, environmental agencies, and women’s health programs. The sequester actually shares an important anniversary — with Big Oil tax breaks. It is not as well-known a date, but one type of deduction, the percentage depletion allowance, celebrates its 100-year anniversary today.

Depletion allowances let oil companies treat the oil in the ground as capital equipment, and thus allows them to write off a certain percentage for each barrel that comes out.

The year 1913 marked the first time a Big Oil subsidy was written into the tax code. The Revenue Act of 1913 allowed oil companies to write off 5 percent of the costs from oil and gas wells beginning March 1 of that year. (For reference, see pages 172-174 of the Act.) A century later, oil companies can now deduct three times this rate, at 15 percent, although the very largest companies no longer qualify. The percentage depletion subsidy also increases when prices are high, at the same time that oil companies enjoy greater profit. It can even eliminate all federal taxes for independent producers.

Closing this tax break would save $11.2 billion over 10 years.

President Obama has called on Congress to eliminate the percentage depletion allowance, along with a series of other tax breaks totaling $4 billion annually. Even Ronald Reagan once asked for the same in a 1985 speech on tax reform:

Quote:
 
Under our new tax proposal the oil and gas industry will be asked to pick up a larger share of the national tax burden. The old oil depletion allowance will be dropped from the tax code except for wells producing less than 10 barrels a day. By eliminating this special preference, we’ll go a long way toward ensuring that those that earn their wealth in the oil industry will be subject to the same taxes as the rest of us.

However, congressional Republicans taking the lion’s share of oil and gas industry contributions have refused to close century-old loopholes in order to raise revenue. A number of specialized Big Oil tax breaks allow the top oil companies to cut their tax bill dramatically, sometimes half (or less) of the top corporate rate. It is not as if Big Oil is struggling: Last year, the five largest oil companies — BP, Chevron, ConocoPhillips, and ExxonMobil — earned $118 billion profit at a time when consumers paid record-high gas prices. This haul follows after a year the companies earned a record $137 billion profit.
Edited by Brewster, Mar 2 2013, 12:23 AM.
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Pat
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All loop holes need eliminated. Big agri has just about run all small farm operations out of business. And not just in this country.
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Brewster
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You're quite correct, Pat.

Many small towns across the Canadian Prairies are essentially ghost towns now, as the little farmers who used to buy stuff locally are gone. The big corporations buy their supplies in bulk lots in Winnipeg or Regina and show up just often enough to plant, cropdust, and harvest.

The province of Manitoba is a perfect example - When I was growing up, Winnipeg had about 450,000 people, and the province as a whole was just under a million.

Now Winnipeg is about 3/4 of a million, but the province is still less than a mil total - the entire province is nearly deserted outside the one big city.
Edited by Brewster, Mar 2 2013, 04:46 AM.
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Corky52
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You are complaining about the natural end product of uncontrolled capitalism, monopoly or near monopoly by the most ruthless and unfettered.




:smoker:
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Pat
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No we're not, we're talking about sweetheart subsidies that make for an uneven marketplace. It favors large operation over the small farmers or energy suppliers not in that field. It needs to stop.
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Corky52
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How were the subsidies arranged?



:smoker:
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Pat
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Do I really need to answer?
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Corky52
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Pat,
If understand and accept the mechanism, then why are you upset with the results?

:smoker:
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Thumper
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Brewster
Mar 2 2013, 04:43 AM
You're quite correct, Pat.

Many small towns across the Canadian Prairies are essentially ghost towns now, as the little farmers who used to buy stuff locally are gone. The big corporations buy their supplies in bulk lots in Winnipeg or Regina and show up just often enough to plant, cropdust, and harvest.

The province of Manitoba is a perfect example - When I was growing up, Winnipeg had about 450,000 people, and the province as a whole was just under a million.

Now Winnipeg is about 3/4 of a million, but the province is still less than a mil total - the entire province is nearly deserted outside the one big city.
20 ft snow drifts and 50mph winds may have something to do with it. It would for me.
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Brewster
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Never bothered me much.

I must say, as I've gotten older, those -40 temps bother me more and more.

Luckily, with Global Warming, we rarely see much below 0*F any more.
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