Percentage Depletion Allowance for Uranium and Fossil Fuels Background In the existing tax code, certain oil, gas, coal and uranium producers receive a huge subsidy through the percentage depletion allowance. Companies participating in these activities can deduct or "write-off" capital investments. This "write-off" reflects the declining value of the mine or well. Companies that mine fuel minerals or drill for fossil fuels can deduct 10 percent for coal mining, 15 percent for oil and gas and 22 percent for uranium mining. Deductions for independent oil and gas companies can amount to 100 percent of the net income for a drilling operation. Coal and uranium mines can deduct up to 50 percent of their taxable income. In both instances, total deductions can frequently exceed the original investment costs of buying and preparing the land for resource extraction.
Green Scissors Proposal Eliminate the percentage depletion allowance for uranium and fossil fuels, saving taxpayers more than $3.6 billion over five years.
Project Hurts Taxpayers The percentage depletion allowance distorts the market by attracting investments that could be used more productively elsewhere in the economy. Furthermore, since the deduction can amount to 100 percent of net income for oil and gas companies, and up to 50 percent for coal and uranium companies, these companies can experience significantly higher profits at the expense of taxpayers and the Treasury.
Project Hurts EnvironmentEnvironmental Protection Agency studies show that carbon emissions could be reduced by 1.1 million metric tons by the year 2010 simply by eliminating this tax break.
This subsidy also encourages the mining of uranium, a highly toxic fuel. The result is more tailing piles, toxic byproducts and disturbed habitats.
$3.6 billion