U.S. Inflation Hits 17-Year High As Increases Move Beyond Food, Oil [Consumer prices jumped 5.6%]

Wall Street Journal ^

[TChris]

By the end of the tenth year, the oilman has deducted $2.75 million from his taxable income, even though his initial investment was only $100,000."

What difference does his initial investment make? In your example, the "oilman" (cue scary music) is being taxed on his income, not his investment.

You just put a big number next to a small number and say, "See? See? Doesn't that make you MAD!?", even though the two numbers have no relation to one another.

[CowboyJay]

"On the bright side, inflation is a very effective way to wipe away debt."

I would think this is true only for the government and private individuals who do not rely on job income as their primary source of earnings

IIRC wages really haven't moved much the past 3 years.

[Iron Munro]

You just put a big number next to a small number and say, "See? See? Doesn't that make you MAD!?", even though the two numbers have no relation to one another.

With all respect, I believe you are interpreting my post incorrectly and being unduly critical.

I didn't "put the numbers there" other than as a quote from the linked reference for the purpose described below, and I didn't say "See? See?"

The example serves to illuminate the magnitude and impact of the old 27.5 percent oil depletion allowance on the domestic oil industry for the time it was in effect.

If you read the full post with an open mind you will see that my point is not to decry profits but to illustrate the impact such an unusually large sweetheart tax break from congress had on decisions affecting the volume of oil produced from domestic wells as opposed to consumption of foreign oil.

If my purpose was to attack oil company profits I would moan the fact that the current oil depletion allowance still lets some companies deduct 15% of the gross income they derive from domestic oil and gas wells from their taxable incomes at a time when industry profits are at an all time high. But I didn't.

I don't have a problem with profits and free markets - quite the contrary. However, I dislike government intervention that distorts supply and demand, and consequently, markets and profits in either direction. especially when it is politically motivated, which is most of the time.

As an aside, it's interesting to note that the (claimed) justification for the oil depletion allowance was to compensate producers for the supposed declining value of the land as each barrel of oil is removed. Producers received the tax break on all wells including those on land they owned and land they leased from private individuals as well as those drilled on government land.

Additionally, producers got the tax break on domestic oil sold to other countries as well as that used internally. The tax break made it profitable for them to compete on the international market with cheap (at the time) Mideast oil, which had the effect of accelerating pumping from US wells. And that is my point.

[RWB Patriot]

Yeah...but we both know Bush is going to get the blame.

[djsherin]

This is mostly due to the devalued dollar in which both parties (and specifically the federal reserve) are to be blamed.

[the_devils_advocate_666]

Just got me Sam’s Club card!