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depletion allowance

Home Forums DISCUSS General Discussion and Questions Oil Subsidies depletion allowance

  • Mon, Apr 02, 2012 - 02:08am

    #5
    osb272646

    osb272646

    Status Bronze Member (Offline)

    Joined: Mar 14 2010

    Posts: 42

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    depletion allowance

The depletion allowance is the cost recovery side of the revenue stream.  If depletion is eliminated, then it would be like telling a grocery store they have to pay taxes on their entire revenue with no deduction for what they had to pay for the things they’re selling to generate that revenue.   How long would a grocery store stay in business if it had to pay it’s income taxes on 100% of its revenues with no offset for the cost it had to pay it’s suppliers?  Loss of the depletion allowance would hurt big and small producers alike.

Sometimes I wish the conservatives would just step back and let those politicians who want to do these things have their way.  In about six months, the populace would be screaming for the heads of those who implemented these “easy sell” solutions.  Unfortunately, that’s not how it works.

If you want to delve into an interesting subsidy, why not take a look at the “home interest deduction”?  Who is that subsidizing?  The home owner?  Or is it really subsidizing the construction/financing/real estate broker conglomerate (who, by the way, pay a lot of campaign contributions and employ a lot of lobbyists)?  Before you answer that, ask yourself what would happen to house prices if that subsidy were taken away, and how the real estate market would adjust within a year or two, maybe less?