"But wait, this time it's worse. The current Senate proposal would actually require oil companies with daily production of 500,000 barrels or more to disregard generally accepted accounting principles, by revaluing their oil inventories. GAAP accounting (and current tax law) allows oil firms to value barrels of oil sold at what it costs to replace that barrel.Isn't this just about par for the course? Could our fearless elected leaders really consider mandating that oil companies value a barrel of oil at $18.75 for the purposes of calculating a tax burden? And, I wonder who benefits from such a law?
The Senate bill would require the companies to revalue their inventories by $18.75 a barrel -- an arbitrary number if there ever was one. In effect, this means that Congress is creating the illusion of higher oil profits, and thus raising the tax liability of oil companies by an estimated $5 billion next year. This would be on top of the 35% tax rate they already pay on their actual profits."
Wednesday, November 30, 2005
From an editorial in today's WSJ: