Statements on Introduced Bills and Joint Resolutionsby Senator James M. Inhofe
Posted on 2013-12-17
S. 1833. A bill to amend the Internal Revenue Code of 1986 to
eliminate the taxable income limit on percentage depletion for oil and
natural gas produced from marginal properties; to the Committee on
Mr. INHOFE. Mr. President, I would like to announce the reintroduction of a bill to amend the Internal Revenue Code to eliminate the taxable income limit on percentage depletion for oil and natural gas produced from marginal properties.
Since 1926 small producers and millions of royalty owners have had the option to utilize percentage depletion to both simplify their accounting methodology and to account for the decline in the value of minerals produced from a property. Percentage depletion is particularly important to America's 700,000 low-volume marginal wells. The average marginal well produces barely 2 barrels per day, yet cumulatively they account for nearly 28 percent of domestic production in the lower 48 states. Since every on-shore natural gas and oil well eventually declines into marginal production, the economic life span and corresponding production of all wells is extended by allowing the use of percentage depletion.
Until 1998, the deduction marginal producers could take from percentage depletion was limited to 100 percent of taxable income from each individual property. Many producers, however, specialize in marginally producing wells and have many properties operating simultaneously. Naturally, some wells in a producer's portfolio are more productive than others. Some would have depletion rates greater than 100 percent of taxable income, while others would have depletion rates lower than the limit. Removing the taxable income limitation allows producers to take percentage depletion deductions on a portfolio-wide basis, which makes their entire operation more economical.
Since 1998, Congress has understood this fact and has suspended the limitation. Unfortunately, the provision has never been made permanent. It has just been extended year after year as part of the Tax Extenders Package. Since we have had this suspension on the books for more than a decade, I think it is time to give producers the predictability they need by making this common sense tax accounting provision permanent.
At a time when our unemployment rate remains over 7 percent, we need to be doing everything we can to encourage economic growth. The energy industry is a major contributor to our economy, and it has a lot of room to grow. The Congressional Research Service released a report that says the United States has the most energy potential under its soil than any other country on earth. Hiding beneath our soil are jobs, wealth, and lower deficits. We should allow this sector to grow. This is a common sense, easy way to do this, so I urge swift passage.
______ By Mr. INHOFE: S. 1834. A bill to amend the Internal Revenue Code of 1986 to permanently extend the depreciation rules for property used predominantly within an Indian reservation; to the Committee on Finance.
Mr. INHOFE. Mr. President, I would like to bring to your attention a bill I am reintroducing that would make permanent the current tax provision that allows capital assets on Indian lands to be depreciated on an accelerated schedule.
For many years, the Federal tax code has provided an incentive for businesses to invest in operations on Indian reservations and lands across the country. According to the law, businesses that purchase capital equipment and use it on Indian lands will be able to depreciate it, on average, more than 40 percent faster than would otherwise be allowed.
This tax provision is important to Oklahoma because of our longstanding history and unique relationship with Indian tribes. With our sluggish economy, we need to do all we can to encourage businesses to reinvest in and expand their operations, as this will create sustainable job growth.
The accelerated depreciation schedule gives businesses the opportunity to recover investment dollars in capital assets more rapidly. This frees money that would have been tied up in the value of their capital assets, such as buildings, equipment, and machinery and enables companies to reinvest it more quickly than was available with a slower depreciation schedule.
The Oklahoma Department of Commerce has reported that many companies attribute this provision as a key reason for relocating to and expanding within the State. One Oklahoma food processing plant manager stated that the credit was a significant factor in the company's decision to expand.
Additionally, today's announcement by Macy's, Inc. to locate a new, world class online processing center in Tulsa was justified in part by the Indian lands tax provision. This new 1.3 million square feet facility will employ [[Page S8916]] 1,100 people full time and will expand to 2,500 people during peak periods. Construction on this project will begin in 2014, and the facility will open for business in 2015. I could not be more excited by Macy's decision to expand its operations in Oklahoma. It is a testament to Oklahoma's strong, business friendly culture and capable work force.
Although the accelerated schedule is currently allowed, the law states it will expire at the end of this year. The provision has typically been renewed each year, but many business leaders have expressed concern that it is not permanent, including the executives of Macy's.
As a former businessman, I understand the problem of unpredictability and so do Oklahoma's business leaders who have expressed frustration over dramatically changing government policies ranging from environmental regulations to the tax code. This kind of environment makes it difficult for businesses to proceed with investment decisions. Businesses need stability, and this is particularly true during times of economic weakness. We in Congress should take this point seriously, and take a step in the right direction by making permanent this important tax provision.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be printed in the Record, as follows: S. 1834 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. PERMANENT EXTENSION OF DEPRECIATION RULES FOR PROPERTY ON INDIAN RESERVATIONS.
(a) In General.--Subsection (j) of section 168 of the Internal Revenue Code of 1986 is amended by striking paragraph (8).
(b) Effective Date.--The amendment made by this section shall apply to property placed in service after December 31, 2013.
______ By Ms. WARREN (for herself, Mr. Blumenthal, Mr. Brown, Mr. Leahy, Mr. Markey, Mrs. Shaheen, and Mr. Whitehouse): S. 1837. A bill to amend the Fair Credit Reporting Act to prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions; to the Committee on Health, Education, Labor, and Pensions.