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Reducing the Impact of State, Local, and Indian Taxes on Western Mineral Development

Daniel H. Israel, Proceedings of 30th Annual Rocky Mountain Mineral Law Institute (1984)

In order to prosper in the 1980's, western oil, gas, and mining producers must minimize the cost of doing business. One significant area where lawyers can help achieve cost reductions is state, local, and Indian taxes. As a result of the movement in the late 1970's to control energy impacts in the [3-3] West through increased local taxation, and as a result of President Reagan's reductions in federal taxes in the early 1980's, state and local tax burdens on both mining and oil and gas production in the West are rising dramatically. Oil and gas producers and mining companies frequently possess significant opportunities to reduce their state and local tax burdens. However, these opportunities are often passed by because of a general lack of understanding in the industry as to how state and local taxes can frequently be reduced. This paper analyzes current state and local tax trends and proposes strategies for minimizing these tax burdens.

First, the paper will summarize the available statistics showing the state and local tax revenues generated in the Rocky Mountain region with particular emphasis on demonstrating the ever-increasing tax revenues derived from mineral development.

Second, the basic property tax valuation concepts found in constitutional provisions and statutory enactments will be examined for the Rocky Mountain states, and methods for reducing t