1960 WI: Oil/gas depletion allowance axed

In 1960, David Pietrusza wrote that immediately after the 1960 Democratic Convention, many oil barons were threatening to bolt the Democrats for Nixon. Rayburn was apparently so furious that he threatened them with an axe of the depletion allowance if JFK/LBJ lost Texas, not just the election. So let's say Nixon performs well in the first debate and Ike does a bit more campaigning, Nixon ekes out a win, including Texas.

Does Rayburn follow through post-election, and if so what are the consequences? I can see it as a catalyst for an informal split similar to the scenario posited in AATW.
 
Does Rayburn follow through post-election, and if so what are the consequences? I can see it as a catalyst for an informal split similar to the scenario posited in AATW.
JFK Wins Without Texas:
Yes. Johnson won't be relied on to convince him because he will have the embarrassment of losing his own state. The oil barons go to the Republicans completely (earlier). Johnson is even more politically isolated, and Connally's rise hits a bump. He likely resigns from the Administration and seeks the Governorship, being one of the last Democratic Governors of Texas.

Nixon Wins With Texas:
Yes, though Majority Leader LBJ could persuade him otherwise. 60% shot it happens I'd say. But then Nixon will veto it, and the oil barons go to the Republicans completely (earlier). LBJ might be able to call it off since Rayburn knows Nixon will probably veto it. In that case, OTL.
 
What are the economic consequences then? Agreed on the political ones.
Less money for the oilmen and more for the federal government. Which means that JFK will have more money to spend. Which means that his tax cuts will never go through unless LBJ (not that they were going to, but he's going to cut even less) becomes POTUS like OTL, since Byrd will balk at even more federal spending. If LBJ still becomes POTUS, expect the depletion allowance to return, though probably reduced from OTL.

Domestic oil drilling will probably decrease a bit, in order for oil prices to increase and profit to increase.
 
In 1960, David Pietrusza wrote that immediately after the 1960 Democratic Convention, many oil barons were threatening to bolt the Democrats for Nixon. Rayburn was apparently so furious that he threatened them with an axe of the depletion allowance if JFK/LBJ lost Texas, not just the election. So let's say Nixon performs well in the first debate and Ike does a bit more campaigning, Nixon ekes out a win, including Texas.
You know that sounds terribly corrupt especially from Kennedy. Where did you get it from.
 

BlondieBC

Banned
It was basically a tax deduction specifically for Texas oilmen.

Is it still in the code? I used to do oil and gas taxes, and I never saw a Texas only deduction. The deduction people normally complain about is the percentage depletion, which lets people take 15% depletion allowance if this is greater than the real depletion on a by well basis. If it is this deduction, it has very little impact on the larger corporations, but would hurt small land owners in oil states. It seems like there was/is a cap which prevents the largest oil companies from taking it.
 
Is it still in the code? I used to do oil and gas taxes, and I never saw a Texas only deduction. The deduction people normally complain about is the percentage depletion, which lets people take 15% depletion allowance if this is greater than the real depletion on a by well basis. If it is this deduction, it has very little impact on the larger corporations, but would hurt small land owners in oil states. It seems like there was/is a cap which prevents the largest oil companies from taking it.
By "Texas only" I meant the oilmen in general, who were predominantly Texan.

Supposedly Carter got the allowance removed.
 
The one Blondie's talking about. From all the talk in contemporary sources, one would think it as untouchable as the mortgage deduction ones today. :p
 

BlondieBC

Banned
The one Blondie's talking about. From all the talk in contemporary sources, one would think it as untouchable as the mortgage deduction ones today. :p

It has been in the code since 1926. There is a good chance that Carter put in the limits on the bigger companies, leaving the little guy alone. The reason it is untouchable is small wells (under 15 barrels per day) is 20% of USA oil production. Take away the subsidy, gasoline prices would go up.
 
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