#taxes + #government

So to start matters, Franklin was writing not as a subject being asked to cede his liberty to government, but in his capacity as a legislator being asked to renounce his power to tax lands notionally under his jurisdiction. In other words, the “essential liberty” to which Franklin referred was thus not what we would think of today as civil liberties but, rather, the right of self-governance of a legislature in the interests of collective security. What's more the “purchase [of] a little temporary safety” of which Franklin complains was not the ceding of power to a government Leviathan in exchange for some promise of protection from external threat; for in Franklin’s letter, the word “purchase” does not appear to have been a metaphor. The governor was accusing the Assembly of stalling on appropriating money for frontier defense by insisting on including the Penn lands in its taxes--and thus triggering his intervention. And the Penn family later offered cash to fund defense of the frontier--as long as the Assembly would acknowledge that it lacked the power to tax the family’s lands. Franklin was thus complaining of the choice facing the legislature between being able to make funds available for frontier defense and maintaining its right of self-governance--and he was criticizing the governor for suggesting it should be willing to give up the latter to ensure the former.

In short, Franklin was not describing some tension between government power and individual liberty. He was describing, rather, effective self-government in the service of security as the very liberty it would be contemptible to trade. Notwithstanding the way the quotation has come down to us, Franklin saw the liberty and security interests of Pennsylvanians as aligned.

I don't know if it is intentional or not, but this appears to be misrepresentation of the situation. The "truck to transport supplies to a well" is not an operating cost. It's a capital expense since it is expense directly going into creating a long-term, income-producing asset (the well). Sticking with his fast-food example, "trucking ingredients from a distributor to the restaurant" to be eaten by patrons in a couple days is most certainly not a long-term, income-producing asset, so it is an operating cost.

Contrasting the expenses included in “intangible drilling costs” with intangible assets shows how intangible is a misnomer in the case of IDCs. An oil producer hiring a truck to transport supplies to a well is clearly not analogous to, say, a company buying up the intellectual property rights to a beloved children’s cartoon character, or the trademark of a fast-food brand. To stick with the fast-food company example, the analogous cost to trucking supplies to an oil well would be trucking ingredients from a distributor to the restaurant—an everyday operating cost of doing business.

Intangible drilling costs are called “intangible” to distinguish them from tangible drilling costs, namely drilling equipment, but it would be more accurate to call IDCs operating drilling costs. Allowing companies to fully expense operating costs is an uncontroversial feature of the tax code across industries, and IDCs are just how operating costs are categorized in the context of oil and gas extraction.