preemptive tax planning
First of all congratulations to those that are able to enjoy the benefits of this new energy boom. Those new workers picking up work in depressed areas and the property owners that now have a new life free from poverty.
In Ohio some of you will remember we had a oil boom in the early 80s. The wells then were mostly Clinton formation wells at about 3,200 feet and were straight vertical wells. The boom was created when oil went from about $11 a barrel to as high as $38. To some land owner royalty owners this was a substantial increase. Things were going along fairly nice until Washington got into it. Under the Carter Administration they passed the Windfall Profits Tax. For most Americans they thought this was a tax upon Big Bad Oil, which they wanted to do when the oil companies posted profits.
However this was not a tax upon thee finished hydrocarbon profits from oil, plastics, fertilizers and other oil derived products from the oil. The Tax instead was a well head excise tax! It was complex tax that taxed crude at different rates from stripper wells with low production (highest bracket) to to newly discovered at a lower rate and taxed the royalty owner at the highest tax rate!
As a result some landowner royalty owners saw a cut of up to 60%the in their royalty owner payments! Can you imagine the shock of seeing a royalty check that was once say $300 for a shipped tank dropping to $120! Oh buy the way don't forget the incomes taxes upon that $120 that your going to pay as well!
In Muskingum County Ohio enough royalty owner owners raised Smith stink to getva meeting with then Ohio Senator John Glenn' aid. In that meeting the aid stated that " John Glenn did not know what he was voting for when he voted in favor for the tax" After about 8 years the tax was done sway with but it effectively took any gain away from the land owner.
This is fair warning we have to put it massive pressure upon these legislators that taxing Americans is not their primary function. Their primary function should be cleaning up waste and corruption within the government!
In Ohio some of you will remember we had a oil boom in the early 80s. The wells then were mostly Clinton formation wells at about 3,200 feet and were straight vertical wells. The boom was created when oil went from about $11 a barrel to as high as $38. To some land owner royalty owners this was a substantial increase. Things were going along fairly nice until Washington got into it. Under the Carter Administration they passed the Windfall Profits Tax. For most Americans they thought this was a tax upon Big Bad Oil, which they wanted to do when the oil companies posted profits.
However this was not a tax upon thee finished hydrocarbon profits from oil, plastics, fertilizers and other oil derived products from the oil. The Tax instead was a well head excise tax! It was complex tax that taxed crude at different rates from stripper wells with low production (highest bracket) to to newly discovered at a lower rate and taxed the royalty owner at the highest tax rate!
As a result some landowner royalty owners saw a cut of up to 60%the in their royalty owner payments! Can you imagine the shock of seeing a royalty check that was once say $300 for a shipped tank dropping to $120! Oh buy the way don't forget the incomes taxes upon that $120 that your going to pay as well!
In Muskingum County Ohio enough royalty owner owners raised Smith stink to getva meeting with then Ohio Senator John Glenn' aid. In that meeting the aid stated that " John Glenn did not know what he was voting for when he voted in favor for the tax" After about 8 years the tax was done sway with but it effectively took any gain away from the land owner.
This is fair warning we have to put it massive pressure upon these legislators that taxing Americans is not their primary function. Their primary function should be cleaning up waste and corruption within the government!
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