Newspaper article THE JOURNAL RECORD

Study: Tax Overhaul Would Cost Coal Industry $1 Billion

Newspaper article THE JOURNAL RECORD

Study: Tax Overhaul Would Cost Coal Industry $1 Billion

Article excerpt

WASHINGTON (AP) - President Reagan's tax overhaul proposal would raise coal industry taxes by more than $1 billion over five years, curtailing production and costing thousands of jobs, says a reportprepared for the National Coal Association.

Hurt most of all, according to the report of the Price Waterhouse accounting firm, would be mining regions which already experience ""disproportionate levels of poverty and unemployment.''

Coal industry taxes would increase by about $180 million in 1986, and by more than $1 billion during the five-year phase-in of the program designed to begin next year, said the study released Tuesday.

An increased tax burden, the report said, would force some companies to reduce capital spending and cut production, driving up prices. The resulting industry shrinkage could mean the loss of 6,400 industry jobs, the study said.

Release of the report Tuesday came as the House Ways and Means Committee prepared to begin writing its own version of the Reagan tax plan. Congressional leaders have said they don't believe the matter can be wrapped up in the House and Senate this year.

The report said Reagan's proposal to phase out the deduction for percentage depletion would have the greatest potential adverse effect on the coal industry.

Under percentage depletion, companies are entitled to a deduction representing 10 percent of the gross income of the mine, so long as the amount does not exceed 50 percent of the net income. The Reagan plan would phase out the deduction, replacing it with a cost depletion formula based on production levels and the estimated amount of coal yet to be mined.

Coal producers say the proposed new deduction is not flexible enough for a mining company's situation, and that coal reserves cannot be accurately measured. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.