MaggieMae
Reality bits
- Apr 3, 2009
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Mr. H. said:Yup the IPAA is like the Farm Bureau. But who would better know about industry and the effects of particular tax measures? They maintain offices and a full time staff in D.C. and have board members all around the country.
It's not that O&G "relies" heavily on so called subsidies, but rather it's a very complex industry with unique cost centers that require just as unique tax treatment. It's not a question of "how little will we tax an industry", but "how much of your revenue will we let you keep?".
Generating revenue requires expensive practices and expensive materials. Shouldn't these costs be deducted from revenues and taxes assessed on net revenues? Over the years, more and more of these costs have been disallowed, some retained, and some regained. The notion of "subsidies" arose when an industry successfully argued for the retention of cost deductions.
It looks like oil and gas is one major industry that would not benefit if any other method of taxation were ever instituted. If they had to dip into just profits for all that maintenance, including tax on every step in the process under a fair tax system, prices at the retail level would be out of sight, and the consumer would pay an enormous tax for the end product. I confess seriously that I have no idea how all that would actually come down as far as accounting practices, but it sure appears on its face that it would be a lose-lose situation.