George Epstein: Half the Battle

Let’s say you own a candy store and you buy a Twix wholesale for 50 cents. You sell it for a buck, and you owe taxes on your 50 cent profit. Now let’s say you own an oil well and you pump a barrel of oil for $50 and sell it for $75.  You would owe taxes on the $25 profit, right?  Nope. For more than a century, the tax code has had something called the Oil Depletion Allowance. Because you’ve “depleted” some of your oil, you get to deduct some of your $25 profit and avoid the taxes. It’s as if the candy store owner didn’t owe taxes on the Twix profits because she didn’t have her Twix anymore. In 1937, the Secretary of the Treasury called it “the most glaring loophole in the tax code.”  It has cost the government a half trillion dollars over the years — far more than all the green energy subsidies combined. 

The Big ____ Bill (you fill in the blank) will result in trillions more in borrowing —over and above the $2 trillion annual deficit abyss we are in now.  We need more revenue and less spending.