Oil Subsidies?

[volinbham]

The Dems keep talking about taking away subsidies for "Big Oil".

My understanding is that they get no special tax treatment compared to any other typical business (actually, worse treatment on a few areas).

Besides the obvious political angle am I missing something? Does Big Oil get special tax breaks that other businesses do not?

 

[Weezy]

I've always heard they get more gross subsidies than other energy sources. But if you looked at percentages of energy production, all sources would probably be equal or alternative with a slight edge. It would make more sense if there were no subsidies and just lower tax rates to begin with, but that would remove lobbying and campaign funding, and picking winners and losers.

 

[volinbham]

I've always heard they get more gross subsidies than other energy sources. But if you looked at percentages of energy production, all sources would probably be equal or alternative with a slight edge. It would make more sense if there were no subsidies and just lower tax rates to begin with, but that would remove lobbying and campaign funding, and picking winners and losers.

Do you know what the form is? My understanding is things like depreciation, R&D credits, etc. that are standard deductions are being labeled "subsidies" (which is misleading to begin with).

I'm curious about any special tax breaks they get that the average business doesn't get.

 

[VolsNSkinsFan]

If they hit a dry well, they get to write it off. Also if you owe on taxes, you can invest in O+G Reg D offerings and write the investment amount off on your taxes

 

[volinbham]

I found a table listing "tax expenditures" which are defined as revenue lost due to tax policies different than the general policy (or something like that). So is you have accelerated depreciation the "tax expenditure" is the loss in revenue between what you pay at the accelerated rate and the non-accelerated rate.

As best I could tell from the list, oil/gas had about 7.6 billion of this between 2010-2014 (projected). Things like expensing chemicals, etc. For comparison, home mortgage deduction was about 1/2 trillion during the same time period.

In the end, it appears the "special treatment" is in hundreds of industries with Oil/Gas nowhere near the top.

If that is all Obama is trying to change (doubtful) then I'd say go for it. It will make no material difference and it takes away a political talking point.

The bottom line is that it and the Buffet rule are window dressing at the expense of doing something that makes an effin' difference.

 

[milohimself]

Neither he nor paul ryan nor anybody else has the balls to actually come out and identify which deductions they would propose eliminating. It needs to be done but it would be political suicide

 

[KentheOrange]

The only special deduction that I'm aware of is depletion. Since it is based on production it is conceivable, and actually expected, that more than the cost of a well can be written off over time. This as opposed to depreciation which is limited to 85 - 100 % of the cost of an asset.

Writing off the cost of a dry hole is nothing special for O&G industry. Any company can deduct the cost of an operational loss, i.e. GE for the past several years.

 

[volinbham]

The only special deduction that I'm aware of is depletion. Since it is based on production it is conceivable, and actually expected, that more than the cost of a well can be written off over time. This as opposed to depreciation which is limited to 85 - 100 % of the cost of an asset.

Writing off the cost of a dry hole is nothing special for O&G industry. Any company can deduct the cost of an operational loss, i.e. GE for the past several years.

This is kind of what I'm getting at. It appears that these "subsidies" are often better described as wording changes that equalize industries from an accounting standpoint. If the accounting rule built into the code uses "equipment" as a term but the corresponding term in O&G is something else then the code adds that wording to create equivalence between industries. The effect is that all industries are being treated equally.

There may be a handful of special tax breaks for O&G (as each industry gets). I'm fine with getting rid of them but it's pure political theater to make a big deal out of it.

 

[KentheOrange]

The Buffett rule is the most laughable proposal yet and is only designed to fan the flames of the class war Obama is trying to start.

In 2009 the IRS processed over 236,000,000 tax returns. The Buffett rule would affect about 4,000 of them. Estimates that I have seen indicate additional tax revenues of about $50 billion a year. Not much of a reduction for the $1.3 trillion deficit is it? Really something to spend time and energy on instead of looking at the real money that needs to be cut from the budget (if they would ever pass one).

 

[PKT_VOL]

Neither he nor paul ryan nor anybody else has the balls to actually come out and identify which deductions they would propose eliminating. It needs to be done but it would be political suicide

This can be said about the other side too with spending cuts and entitlement reform.

As for political suicide, I lean a little bit more very day towards only allowing one term for politicians.

 

[milohimself]

This can be said about the other side too with spending cuts and entitlement reform.

As for political suicide, I lean a little bit more very day towards only allowing one term for politicians.

Absolutely. Term limits are just one of many necessary steps that need to be taken.