Lessons Learned and Forgotten

phase-in of federal income taxes, Congress allowed oil and gas companies to deduct 27.5 percent of gross revenues (up to half of net income) for corporate income tax purposes. Characteristically, a tax policy that began as a technical adjustment of the tax code turned into a deliberate measure to stimulate oil and gas production. The deduction was a big hit with the industry because it far exceeded the depreciation needed for capital recovery and lowered the cost of doing business, and thus the consumer cost of oil.