For US federal income tax purposes, Big Oil and Big Oil-related Corps
are presently permitted to deduct in the first year 70% of their
Intangible Drilling Costs (IDCs). These IDC expenditures include labor,
fuel, materials, supplies truck rent, repairs to drilling equipment,
and depreciation for drilling equipment. The portion not deducted in
the first year is amortized over 5 years.
My proposal here is
to require 100% of these IDC expenditures of Big Oil Corps and Big
Oil-related Corps to instead be initially capitalized and amortized over
10 years.
I would not apply my above proposal to smaller Oil and Oil-related companies.
The
economic damage to Big Oil Corps and Big Oil-related Corps from this
proposal is substantially softened here due to this corporate tax
loophole closer being treated as a Temporary Tax Difference under US
generally accepted accounting principles. The total federal income tax
deductions for these IDC expenditures will be the same over the long
run, it's just that these tax deductions will occur must later than they are presently. Thus, there will be no income tax charge to the income statements
of these Big Oil Corps and Big Oil-related Corps from my proposal here.
There
will be significantly positive CBO scoring to the US Government from
this proposal, for the next 10 years and for many years thereafter.
All of the money raised here by the US Government will be used to reduce the US Debt.
