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<p>[QUOTE="Cloudsweeper99, post: 1180072, member: 3011"]Let's review what these "subsidies" are all about.</p><p><br /></p><p>The largest is the "Domestic Manufacturing Deduction." This was passed in 2004 to get companies to manufacture in the US and hire people here at home. Most companies can deduct 9% of net income using this deduction, but oil and gas companies can only deduct 6%. </p><p><br /></p><p>Then there is the Domestic Drilling subsidy passed in 1913 to encourage domestic energy production. It allows oil and gas producers to deduct the costs of preparing a site for drilling, such as clearing trees and pouring concrete - normal business expenses in the eyes of many. Small companies can deduct 100% and the majors can deduct 70% with the rest being capitalized. So it is merely a timing difference, and not a permanent subsidy. </p><p><br /></p><p>Finally there is the 1926 depreciation rule that permits smaller companies to deduct 15% of a well's revenue annually as a depreciation expense to simplify the tax code so that companies don't have to guess how long a well will last. This provision was eliminated for the majors in 1975 and now Congress wants to take it away frome the independents. </p><p><br /></p><p>This is what Congress is doing to "protect" you from the evil oil companies. They only earn 5% net income on revenue - below average. But the business of providing energy to the world is enormous - second only to food production. So the resulting numbers appear larger than they really are.[/QUOTE]</p><p><br /></p>
[QUOTE="Cloudsweeper99, post: 1180072, member: 3011"]Let's review what these "subsidies" are all about. The largest is the "Domestic Manufacturing Deduction." This was passed in 2004 to get companies to manufacture in the US and hire people here at home. Most companies can deduct 9% of net income using this deduction, but oil and gas companies can only deduct 6%. Then there is the Domestic Drilling subsidy passed in 1913 to encourage domestic energy production. It allows oil and gas producers to deduct the costs of preparing a site for drilling, such as clearing trees and pouring concrete - normal business expenses in the eyes of many. Small companies can deduct 100% and the majors can deduct 70% with the rest being capitalized. So it is merely a timing difference, and not a permanent subsidy. Finally there is the 1926 depreciation rule that permits smaller companies to deduct 15% of a well's revenue annually as a depreciation expense to simplify the tax code so that companies don't have to guess how long a well will last. This provision was eliminated for the majors in 1975 and now Congress wants to take it away frome the independents. This is what Congress is doing to "protect" you from the evil oil companies. They only earn 5% net income on revenue - below average. But the business of providing energy to the world is enormous - second only to food production. So the resulting numbers appear larger than they really are.[/QUOTE]
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