H.R.2184 – End Oil and Gas Tax Subsidies Act

Re:H.R.2184 – End Oil and Gas Tax Subsidies Act by culi on Friday September 09, 2022 @01:53PM (#32782610)

> Most of these are not so much "subsidies" so much as normal bookkeeping practices as employed by the oil industry. Developing a new copper mine would count as an R&D expense, but not a new oil well.

Which part specifically seems like "normal bookkeeping" to you?

  This bill:
  - repeals the tax credits for producing oil and gas from marginal wells and for enhanced oil recovery;
  - repeals the tax deduction for the intangible drilling and development costs of oil and gas wells;
  - repeals percentage depletion;
  - repeals the tax deduction for tertiary injectant expenses;
  - repeals the passive loss exception for working interests in oil and gas property;
  - denies the tax deduction for income attributable to domestic production activities for oil and gas activities;
  - prohibits the use of the last-in, first-out (LIFO) accounting method by major integrated oil companies;
  - limits the foreign tax credit for dual capacity taxpayers (i.e., taxpayers who are subject to a levy of a foreign country or U.S. possession and receive specific economic benefits from such country or possession); and
  - expands the definition of crude oil for purposes of the excise tax on petroleum and petroleum products to include any oil derived from a bitumen or bituminous mixture (tar sands), and any oil derived from kerogen-bearing sources (oil shale).

[ Parent | on HN ]

Re:H.R.2184 – End Oil and Gas Tax Subsidies Act by legitster on Friday September 09, 2022 @02:07PM (#32782828)

Nearly all of them? Except for the credits specifically for producing oil or the trade definition of crude oil.

LIFO is illegal in some countries but is acceptable under GAAP. The Oil industry is not special here.

Percentage depletion is the IRS standard for non-renewable resources. Again, oil is given the same percentage as copper: https://www.law.cornell.edu/uscode/text/26/613

Passive loss exception is also standard: https://www.irs.gov/taxtopics/tc425

The IRS maintains a nicely detailed guide on how tax deductions work: https://www.irs.gov/publications/p535 Almost no one would say a business deducting COGS would be a "subsidy".

[ Parent | on HN ]

Re:H.R.2184 – End Oil and Gas Tax Subsidies Act by culi on Friday September 09, 2022 @02:17PM (#32782950)

How is that just "bookkeeping"? These are benefits that provide an actual tangible benefit to oil and gas companies. The fact that some of these subsidies are happening in other industries doesn't mean it's not a subsidy...

[ Parent | on HN ]

Re:H.R.2184 – End Oil and Gas Tax Subsidies Act by legitster on Friday September 09, 2022 @02:33PM (#32783150)

I mean, do you consider every tax deduction to be a subsidy? The standard deduction for all US families? Is paying anything less than 100% of income a subsidy?

The US government has a very established tax code to specifically determine what amount of money it should consider taxable and to smooth out expectations. Claiming a deduction is not inherently a subsidy. Especially if you are a business and might lose 3x as much money in a year as you make to invest in long term growth.

If Oil and Gas have unfair tax advantages, that's a problem. These seem boilerplate.

[ Parent | on HN ]

Re:H.R.2184 – End Oil and Gas Tax Subsidies Act by culi on Friday September 09, 2022 @03:50PM (#32784046)

Subsidy:

> a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.

Yes, tax deductions (to businesses) are absolutely subsidies. It's the most common form of subsidization!

> Especially if you are a business and might lose 3x as much money in a year as you make to invest in long term growth.

This bill extends the amortization schedule from 24 months to 7 years. It's actually helping ease this burden. The rest of the clauses are removing what are essentially government handouts to oil and gas companies.

[ Parent | on HN ]

Re:H.R.2184 – End Oil and Gas Tax Subsidies Act by matt_attack on Friday September 09, 2022 @08:42PM (#32786559)

Unless they get a tax refund from it, it absolutely is not a sum of money granted to them.

In reality the government is simply just punishing all other businesses that can't take the same deductions.

You might as well consider it a subsidy to you if your neighbor gets mugged.

[ Parent | on HN ]