Originally published at: Rep. Katie Porter kindly offers to remove the oil industry's tax exemptions | Boing Boing
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Katie Porter, National Treasure!
And
“May the Math be with you”
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Love her.
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She’s basically the Hermione Granger of of congress.
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In case anyone was curious about how much money she is talking about.
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Yeah, I wonder if more Americans knew about the insane tax breaks these guys get, compared to their own tax rates, if that might change their thinking. Or would they just think, “well, it means gas is cheaper!”
As kind of a supporting note for non-USAians, all of us working from home now cannot deduct home office expenses, but companies with empty offices can deduct those costs. Doing any kind of freelance work (in my limited experience) results in an almost 50% effective tax rate on that extra income.
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Uh, yeah. This right here. Not a lot of incentive to get worked up over a corporation’s tax breaks when it lets them run their SUVs.
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As kind of a supporting note for non-USAians, all of us working from home now cannot deduct home office expenses, but companies with empty offices can deduct those costs. Doing any kind of freelance work (in my limited experience) results in an almost 50% effective tax rate on that extra income.
Yes and no. You cannot deduct home-office expenses on W2 income. This is a relatively recent change (within the past 10 years, I think). You can absolutely deduct home-office expenses for 1099 income, assuming you’re filing a Schedule C and a Business Use of the Home form. It can raise red flags for the IRS and there are some tricky limitations on it.
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Aside from confirming that Katie Porter is awesome, I learned one other thing from this video, which is why you absolutely should not use a webcam set above your eyeline. Because of the relative camera positioning, the recording of this conversation absolutely makes it look like Katie Porter was staring down at the lying oil executive the entire time, which was perfect in this case.
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I know little about her, yet the news items I see make me wish there were a hundred more of her.
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They seem to be talking about ‘intangibles’. Aren’t those things like ‘goodwill’ or even the value of a ‘brand’? What kinds of intangibles are there when you drill into your mother earth with a big fat jack pump?
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I don’t give a flying fornication at a rolling donut whether or not this oil executive wants the exemption removed – please, remove it anyway!
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These are not tax exemptions they are talking about. They are talking about the timing of deductions for exploration costs. The issue is deduct now or deduct later? Politicians say deduct later so we bump tax revenue now. The SEC generally has the opposite view as this is a way to hide costs and bump assets and profitability. This story could be framed as greedy politicians, except that oil companies are the bigger villain now.
TLDR part: It appears that exploration companies are allowed to deduct 70% of Intangible Drilling Costs (IDC) in the year they are incurred. IDC is a fancy name for overheads that don’t necessarily lead to revenue generation. The alternative for deducting costs associated with long-term assets is to capitalize them and amortize (deduct) over the expected life of the asset. In this case that would be any producing wells. IDC have similar characteristics to other industries’ R&D costs in that they must be incurred, but there is no certainty as to a profitable outcome.
Interesting that Enron was criticized for doing exactly the opposite. They capitalized costs for which there would be no return in the future. The market liked it because their assets were growing and the company was profitable. Yes, this is over-simplified and a cherry-picked example of Enron’s misdeeds.
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I sure wish we had a representative like her in my district (NC 10), which is currently supposedly represented by Patrick McHenry. “Supposedly” because he’s never done anything remotely good for our district. IMO, of course.
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She is such a badass!
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If you can put an exact dollar value to it, it is very explicitly tangible. It feels like that dollar amount.
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Wake me when Congress actually does something to remove the cush rebates they’ve been getting for years.
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I’ll be happy wjen the government starts forcing these corporations to actually start working on mitigating global warming they’ve caused.
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