Is depreciation a subsidy?
Nope..but I think you're reaching..at this point...Especially since over time oil increases in value..it does not depreciate. If the oil companies wish to write off their capital expenditures..equipment and such..via depreciation--I've no problem with that. As long as they use the same rules every other business uses....a percentage..and not the whole. Oh..and as long as it's understood that oil exploration is the cost of doing business..and is NOT included as a write-off. I simply do not believe that the American taxpayer should bear the cost of private businesses everyday expenses.
How is depletion of an oil deposit different than depreciation? How is exploration expense not an expense to be written off, like any other business expense?
Can depreciation exceed the value of the original investment? The depletion allowance can. And normally you depreciate a building that someone built. Nobody "built" the damn oil that has been sitting in the ground for millions of years.
Because no one built it, it can't be depleted?
Come on, use your head. I already told you how it was different. The depletion allowance can exceed the value of the original investment, which is total bullshit and makes no sense whatsoever. How can you justify that? In your example the depletion allowance would have been three million dollars. And it could be three million dollars in perpetuity. I mean why don't I get a depletion allowance for the gasoline I buy for my business. I fill up, it costs forty bucks. I write off the forty bucks and then, well hell, I guess I should get a depletion allowance because that gas gets depleted.
