independent producers, suppliers, and drillers. They are the same type of independent who has historically found 80% of our domestic reserves. His usual opera tion is long on guts and short on capital but, nevertheless, he continues to drill and search for oil. Normally, his exploration capital is raised from investors outside of the oil business, from men and women who can afford to risk capital on the 1 in 15 chance that oil will be discovered. Ironically, these same investors who provide the funds necessary to the small independent, are now a primary target of this Congress in its effort to revise the present tax structure. The proposed tax revisions, if adopted, can only affect adversely those in dividuals and firms now engaged in the oil and gas industry. This consideration alone is not necessarily a valid reason for avoiding a change. However, all the consequences of any tax change must be measured not only in terms of the immediate revenues expected to be realized but, more importantly, in the long range effects to be expected and the overall impact on the economy and security of our nation. In our Tri-State area, a reduced depletion rate will seriously cripple our segment of the domestic oil industry. This would result in the obvious curtailment of employ ment with the resulting loss in payrolls and taxes as well as a loss in oil pro duction and, consequently, royalties to the land owners and taxes to the counties. If it can be recognized that a cut in the present depletion schedule would seriously cripple the Tri-State oil industry, then it is even more apparent that a change in the manner of deduction of intangibles will literally, and without exception, destroy the domestic oil business in our area. Because the principle sources of capital funds relied upon by our operators are derived from outside investors, any required capitalization of such funds will shut off completely this flow of money and force our operators out of business. Over 1500 small businessmen employing approximately 30,000 men and women in our Tri-State area annually contribute about 400 million dollars to the economy, which includes 30 million dollars annually paid to land owners in royalties and over 6 million dollars in taxes to the counties. As noted, the proposed tax change will not merely work a temporary hardship upon these independents, such changes will virtually eliminate them as a contributing segment of our economy. Our local economy would be unable to compensate for such a loss. More importantly, we maintain that our country cannot affort to lose this segment of its domestic oil industry. Once it is lost, it is doubtful that either the reserves or the skilled technicians could ever be replaced. In conclusion therefore, I submit that the action of this committee will very definitely determine the future course of the independent oil man in the states of Illinois, Indiana and Kentucky. Unfortunately, the choice is not one of compromise. Our very livelihood depends upon the decisions you will make. INFORMATION SERVICE 520 UNION CENTER For Release: Morning Papers, Wednesday, October 1, 1969 STATEMENT BY TOM L. SCHWINN, B.S., L.L.D., J.D., |