The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS ON MAY 17, 2011” mentioning the U.S. Dept. of Commerce was published in the Senate section on pages S3107-S3108 on May 18, 2011.
The publication is reproduced in full below:
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS ON MAY 17, 2011
By Mr. INHOFE:
S. 1007. 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 Finance.
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 611,000 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 efficient.
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 is at 9 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 recently 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.
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By Mr. INHOFE:
S. 1008. 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. In light of the weak and ongoing economic recovery, we need to be doing all that we can to encourage businesses to reinvest in and expand their operations. This alone is what will create sustainable job growth.
The accelerated depreciation schedule helps do that by giving businesses the opportunity to recover investment dollars in capital assets more rapidly. This frees up capital and allows companies to reinvest that money more quickly than would have otherwise been possible. This is money that would have been tied up in the value of their capital assets, things like buildings, equipment, and machinery.
According to the Oklahoma Department of Commerce, 96 companies in Oklahoma announced $1.7 billion of investments during the 2009-2010 period, creating an estimated 10,500 jobs. The trickledown effect of these investments is strong: 12,000 additional jobs and additional capital stock investments of over $200 million. Companies enjoyed at least $50 million in economic incentives as a direct result of the accelerated depreciation schedule.
The Oklahoma Department of Commerce has also 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 recently stated that the credit was a significant factor in the company's decision to expand. Had the credit not been there, the business may not have expanded, and the unemployment rate would be worse than it is today.
The accelerated schedule is currently allowed, but the law states that it will expire at the end of this year. While the provision has typically been renewed each year, many business leaders have expressed concern that it is not permanent. I can understand why. As a former businessman myself, I understand the problem of unpredictability. More and more, unpredictability is the most serious concern I hear of from Oklahoma's business leaders. They are frustrated that many government policies, ranging from environmental regulations to the tax code, are changing so dramatically that they have no way of estimating how the new regulations will impact their businesses. How do you expect anyone to make investment decisions in that kind of environment? Businesses need stability, and this is particularly true during times of economic weakness. We in Congress should take this point seriously, and we can take a step in the right direction by making permanent this important tax provision. I urge swift passage.
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