The so-called "fiscal cliff" ordeal officially ended January 3 when President Barack Obama signed the American Taxpayer Relief Act into law. The new bill raises taxes for households earning more than $450,000 while maintaining Bush-era tax rates for everyone else. It also re-imposes a pay freeze on members of Congress, extends the 2009 expansion of the Earned Income Tax Credit, the Child Tax Credit and the American Opportunity Tax Credit, and avoids the “milk cliff” by blocking the immediate expiration of the farm bill.
Yet, not every provision of the ATRA has an obvious free-fall-averting sheen. Section 312, or the "NASCAR loop hole," extends a $43 million annual tax break to people who build or maintain racetracks. Section 403 extends a credit for “2- or 3- wheeled plug-in electric vehicle[s].” And section 406, which is buried in a group of provisions extending credits on wind and solar energy, extends a tax credit for coal produced on American Indian land.
Today, only three mines in the country benefit from the credit. One of them is a 10,427 acre, single-pit surface mine on the Crow Indian reservation in southeastern Montana.
The Absaloka mine has been leased and operated by the Westmoreland Coal Company since the 1970s. It employs about 100 tribal members, paying an average salary of $75,000. The tribe also receives royalties from the mine. “We believe coal is on our reservation for a purpose,” says tribal attorney Bill Watt, “and that is to help support the tribe.”
The section 406 credit will expire in 8 years, and it is unclear whether or not Westmoreland will close up shop at that time. The Crow aren't worried. Recently elected tribal leaders are looking over a deal proposed by Cloud Peak Energy, a Wyoming-based mining operation, to extract up to 1.4 billion tons of coal—or more than the United States uses annually—from beneath tribal lands.
Section 406 is not the only provision buried in the ATRA with Montana implications.
Section 306 will extend for one year a $165 million tax credit to America's “short line” railroad companies of which there are five in Montana.
In order for a railroad to qualify as “short line” or Class III, the Association of American Railroads requires the railroad earn less than $34.7 million annually. Nationally, there are 550 such railroads operating on nearly 50,000 miles of track, including Montana's Yellowstone Valley Railway, Dakota Missouri and Western Railroad, Mission Mountain Railroad, Montana Rail Link and Montana Central Railroad.
In a statement issued by the American Short Line and Regional Railroad Association, President Richard F. Timmons expounded on the importance of the tax credit: “Short lines operate...and preserve the first and last mile connection to factories, grain elevators, power plants, refineries, and mines that employ over 1 million people...The...credit allows small railroads to improve railroad infrastructure that benefits the public by using more of what they earn, rather than giving it to the government.”
The Railway Tie Association estimates the tax credit will pay for the installation of between 500,000 and 1,500,000 rail ties.