So your saying if joe blows mineral check from continental is 10k the state takes its cut out of that 10k? Then they take an equal percentage from continental on the remaining amount?
That is exactly how it works. The tax is on production from the well. The mineral owner is set by contract a percentage of that production, The production tax is absolutely a tax being paid by the mineral owner, as well as the oil production company. I am shocked you are just now learning this.
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p.s. The State is smart enough to make the oil companies withhold it from the Royalty checks. It is a specific line on the monthly check stubs, and it is also on the 1099's the Royalty owners get every year.
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Oh yeah, and then the Royalty recipients also get to pay income taxes on that as well (not to mention the Obamacare tax....I think it's called the Net Investment Tax). It works out to where one's royalty income has a net tax rate of 33-52%, depending on their other income.
So yeah, it really is the mineral owners that are getting taxed into oblivion. There would be open conflict in this country if everyone paid the same rates.
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I am a single guy with a average income. I pay about 300 to 400 dollars a year in income taxes. Let's call it $360. $30 a month. $15 per paycheck. Eliminating the income tax wouldn't change my life one bit.
Unless you are thriving on minimum wage, you may wish to run those numbers again. $400 a year suggests you make $20k a year, or probably less.
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not sure i see anything but upside with this. assuming its 8.4 billion of the oil companies money derived from the state's oil supply that will eventually dry up, isn't it wise to plan for the day when that happens? 8.4 billion at 7% compounded monthly over 20 years will be about 34 billion if my math is correct. i think it would be reasonable to expect that account to be nearly 50 billion in 2040. not accounting for additional contributions. our annual budget is currently about 7.5 billion/year. the interest alone on 50 billion is going to go a long ways towards helping this state pay its bills when the oil fields dry up.
It is so NICE to see someone else that gets it. This can be a ticket to a very low tax bill down the road, we are just now starting to see it come to fruition. Our kids though...