National Affairs: The Ears of Texas

Tax reformers are about as popular in Texas as temperance preachers at a liquor dealers’ convention. The trouble with tax reformers, as Texans see it: they often point accusing fingers at the hefty 27½% tax deduction that the Federal Government grants to oil and gas producers as a “depletion allowance.” The oil and gas depletion allowance, widest and most famous of tax loopholes, costs the U.S. Treasury on the order of $1 billion a year, and much of that sum stays in Texas. Accordingly, Texas’ own Senator Lyndon B. Johnson had to do some tall explaining about the Democratic campaign platform when Texas newsmen cornered him last week. One plank in the platform promises to “close the loopholes in the tax laws,” and includes depletion allowances “among the more conspicuous loopholes.”

With the ears of Texas upon him, L.B.J. soothingly assured his hearers that the platform must be talking about other depletion allowances. “The platform pertains only to loopholes,” said Johnson, “and I see none in oil.”