The Depletion Rationale And Recent Political Pressures Of Erosion ? Introduction

During 1960, the controversy over percentage depletion reached the level of debate between presidential candidates. Nixon took the position that he would not tamper with the status quo in this matter. Kennedy took the position that he was willing to take a fresh look at the issues involved. Kennedy's position appears to have been based upon two premises: (1) new sources of federal revenue may be needed; and (2) current depletion rates, even if sound in principle, may be too high and, therefore, inequitable. The latter premise constitutes the basis for the claims that depletion allowances are simply "loopholes" of tax avoidance. Very probably the controversy over percentage depletion will remain in the political limelight during most of the coming decade. It is quite possible that the current depletion rates, at least those for oil and gas, will be reduced during this period. The aim of this paper is to isolate the complex causes of this mounting opposition to percentage depletion.