New Tax on Oil Royalty Payments

I'm blogging on my iPad from along the incredible Columbia River gorge.

Some time ago I posted a note about the new "3.8 percent tax on dividends" with the recently passed health care bill. Someone asked what that had to do with the Bakken.

It turns out, "quite a bit."

The 3.8 percent tax will affect oil royalty payments beginning in 2013.

It appears that for simple-minded folks like me, this tax will affect most passive income and was inserted, some claim, to preclude taxing "Cadillac" health plans offered by some unions for some members.

One additional comment: passing the original tax was difficult, but raising it a tenth of a percent periodically to cover ever-increasing health care costs will be comparatively easy. So, one can expect to see a rate increase to 4.0 percent a year or so after 2013 and before you know it, we could see significantly higher rates farther down the road.

For more, click here.

By the way, I happened to catch part of a town meeting somewhere in the US last week, and it appears others are starting to notice this new tax. It's going to affect a lot more than oil royalty payments, but that's how it's connected to the Bakken.