The so-called "fiscal cliff" ordeal officially ended Jan. 3 when President Barack Obama signed the American Taxpayer Relief Act into law. The new measure raises taxes for households earning more than $450,000 while maintaining Bush-era tax rates for everyone else.
Yet not every provision of the bill has an obvious free-fall-averting sheen. Section 312, or the "NASCAR loophole," 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 tax credit pays Westmoreland an estimated $2.26 per ton of coal extracted at Absaloka. In 2007, the mine produced 7,704,556 tons of coal. In 2010, it produced 5,467,670 tons. Last year marked the company's best year in at least the last decade with revenues exceeding $569 million.
The section 406 credit will expire in eight years, and it is unclear whether or not Westmoreland will close up shop at that time. The Crow leaders aren't worried. Recently elected tribal leaders are currently looking over a deal proposed by Cloud Peak Energy, a Wyoming-based mining operation, to extract up to 1.4 billion tons of coalor more than the United States uses annuallyfrom beneath tribal lands.