Inhofe/Boren/Coburn Introduce Important Tax Legislation for Oklahoma

WASHINGTON, D.C. – U.S. Senator Jim Inhofe (R-Okla.), joined by Senator Tom Coburn (R-Okla.) in the Senate and Congressman Dan Boren (D-Okla.) in the House of Representatives, today introduced two pieces of tax legislation vital to Oklahoma’s economy.  Their first bill would eliminate the net income limitation on percentage depletion allowance for marginal wells.  Senator Inhofe, along with Senator Coburn, also introduced a second tax bill that would permanently extend accelerated depreciation on Indian Lands, companion legislation to a bill Representatives Dan Boren and John Sullivan (R-Okla.) introduced in the House last week (HR 474). Each year, including late last year, Congress passes a one-year extension of both tax provisions in a tax extender package.  Their legislation makes both beneficial tax provisions permanent.   
  
Senator Inhofe: "I have long worked to ensure that each year's tax extenders package includes accelerated depreciation of capital assets on Indian lands and the suspension of the net income limitation for energy produced from marginal oil and natural gas wells to keep these wells economically viable and producing,” Senator Inhofe said.  “These two provisions have consistently been extended for one-year in previous years and are vital to Oklahoma's economy.  I am happy to join Congressman Boren in this important effort to make these pieces of tax extenders legislation permanent. Since these provisions are so vital to economic development and job growth in Oklahoma, it is essential that we work diligently to ensure their continuation in light of the weakening economy.”
 

Congressman Boren: “One of the best ways to stimulate the economy and to grow Main Street is to provide our local, small businesses with direct and sustained tax relief that they can depend on from one year to the next.  Successful business owners plan several years in advance and must prepare their business models for any number of issues that can confront our global, national, state, and local economies,” Congressman Boren said.  “By making these tax incentives permanent, we can give thousands of Oklahoma’s small business owners and independent energy producers an important tool they can count on for many years to come.  I have worked closely with Senator Inhofe, the entire Oklahoma delegation, and Congressional leadership to ensure these provisions are extended each year.  I will continue to fight alongside my Oklahoma colleagues to make sure they are made permanent.” 

Dr. Coburn: “I am pleased to join my colleagues in reintroducing these important bills.   It is my hope that Congress will consider both bills quickly because they will play an important role in growing our economy and creating jobs, which we need now more than ever.”

Eliminating Net Income Limitation on Percentage Depletion Allowance

The net income limitation requires tax percentage depletion to be calculated on a property-by-property basis. The typical independent producer can have numerous oil and gas properties, many of which could be marginal properties with high operating costs and low production yields. The producer may not have net income from a particular property, especially marginal properties. When domestic production is most susceptible to being plugged, the net income limitation discourages producers from maintaining marginal well production.
 
Extension of Accelerated Depreciation on Indian Lands

It provides for special accelerated depreciation for new and used assets acquired after December 1993 on Indian reservations and former Indian reservations in Oklahoma.  This depreciation incentive provides an approximately 40 percent shorter recovery period for most commercial property. This accelerated depreciation schedule has been very successful in encouraging capital intensive businesses to locate or expand in Indian Country in Oklahoma and throughout the country. Maintaining this tax benefit is essential to continuing job growth in Oklahoma during the current economic downturn.
  

Related Links: 

Inhofe Successful in Ensuring Key Oklahoma Priorities Included In Tax Bill

Tulsa World: Tax Provisions RenewedJournal Record: Smaller oil, gas producers could receive tax relief

The Oklahoman: Privately owned marginal oil wells pumping out cash for Oklahomans

Senator Inhofe’s Record of Support for the Extension of Expiring Tax Relief Important to Oklahoma 

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