>In the United States, oil companies can take a tax deduction for a large portion of their drilling costs.
Not a tax lawyer, but based on my reading of the linked regulation, the "take a tax deduction" characterization is very misleading. The key phrase is "intangible drilling and development costs incurred by an operator [...] in the development of oil and gas properties may at his option be chargeable to capital or to expense". This doesn't mean the government refunds their development cost, or even a portion of it. It just means oil company can immediately deduct drilling expenses from their tax returns, rather than spreading it out over several years. It's similar to IRC Sec. 174 changes for software development expenses. Is it a benefit to oil companies? Yes, most definitely, due to the time value of money. However, it's misleading to call it a "tax deduction". A more accurate statement would be "oil companies can deduct their drilling costs sooner".
A lot of it is due to the odd use of the word subsidy in this and similar articles.
Say an oil company spends $50 producing a barrel of oil, sells it for $80 and sends half the difference, $15 to the government in tax. On the definitions in this article the government is likely subsidising the oil production because they are likely "take a tax deduction for a large portion of their drilling costs" and not billing for the pollution effects. But in everyday language they are taxing not subsidising oil production.
And then what should the government do? If they ban drilling or double the tax they lose the tax revenue and jobs.
For cars, fine, but why is home electricity from fossil fuels being subsidised? You can kill two birds with one stone by subsidising renewable electricity only, no?
So then I would get to pay more for trying to make climate friendly decisions in the form of electrical lawn equipment and EVs? You tend to subsidize in the direction of encouraged behavior.
In Austria (and Germany too it think) the further away you drive to work, the more money the government gives you for fuel in your tax return. But WFH? No, that's not possible, we don't do that here, so every morning the highways are full of people subsidized by the state to spend their day in an office doing what they can do from home.
I work with some germans and they work from home all the time.
On the plus side, the tax return of work commute by car increases labour supply and enables people to live further from the high density areas, not everyone can wfh.
With electric vehicles, maybe they are good enough even from an environmental perspective.
>I work with some germans and they work from home all the time.
I was talking from the perspective of Austria.
>On the plus side, the tax return of work commute by car increases labour supply and enables people to live further from the high density areas, not everyone can wfh.
Yeah of course, the issue is when you can WFH but employers would rather you burn fuel to get to the office and the state supports that waste while taking about how climate friendly they are. Well if the state would be climate friendly wouldn't they support WFH?
>In the United States, oil companies can take a tax deduction for a large portion of their drilling costs.
Not a tax lawyer, but based on my reading of the linked regulation, the "take a tax deduction" characterization is very misleading. The key phrase is "intangible drilling and development costs incurred by an operator [...] in the development of oil and gas properties may at his option be chargeable to capital or to expense". This doesn't mean the government refunds their development cost, or even a portion of it. It just means oil company can immediately deduct drilling expenses from their tax returns, rather than spreading it out over several years. It's similar to IRC Sec. 174 changes for software development expenses. Is it a benefit to oil companies? Yes, most definitely, due to the time value of money. However, it's misleading to call it a "tax deduction". A more accurate statement would be "oil companies can deduct their drilling costs sooner".
Money now is more valuable than money later. It's an enormous subsidy that shouldn't exist; don't quibble over semantics.
>Is it a benefit to oil companies? Yes, most definitely, due to the time value of money.
A lot of it is due to the odd use of the word subsidy in this and similar articles.
Say an oil company spends $50 producing a barrel of oil, sells it for $80 and sends half the difference, $15 to the government in tax. On the definitions in this article the government is likely subsidising the oil production because they are likely "take a tax deduction for a large portion of their drilling costs" and not billing for the pollution effects. But in everyday language they are taxing not subsidising oil production.
And then what should the government do? If they ban drilling or double the tax they lose the tax revenue and jobs.
For cars, fine, but why is home electricity from fossil fuels being subsidised? You can kill two birds with one stone by subsidising renewable electricity only, no?
So then I would get to pay more for trying to make climate friendly decisions in the form of electrical lawn equipment and EVs? You tend to subsidize in the direction of encouraged behavior.
Yes, which is what I said.
In Austria (and Germany too it think) the further away you drive to work, the more money the government gives you for fuel in your tax return. But WFH? No, that's not possible, we don't do that here, so every morning the highways are full of people subsidized by the state to spend their day in an office doing what they can do from home.
I work with some germans and they work from home all the time.
On the plus side, the tax return of work commute by car increases labour supply and enables people to live further from the high density areas, not everyone can wfh.
With electric vehicles, maybe they are good enough even from an environmental perspective.
>I work with some germans and they work from home all the time.
I was talking from the perspective of Austria.
>On the plus side, the tax return of work commute by car increases labour supply and enables people to live further from the high density areas, not everyone can wfh.
Yeah of course, the issue is when you can WFH but employers would rather you burn fuel to get to the office and the state supports that waste while taking about how climate friendly they are. Well if the state would be climate friendly wouldn't they support WFH?