Windfall profits tax nicks big firms, but thumps little royalty owners

W. P. Bass, a west Texas building contractor, has not taken on any new jobs since early this year when record- high interest rates made his business unprofitable.

At the time, however, the situation did not look too bleak. Mr. Bass was nearing retirement anyway, and had an extra source of income that looked rock steady: royalty ownership and some small oil wells.

Then his first monthly royalty income check arrived with the education for the "windfall profits" tax that became law in March. His royalty income dropped 35 percent, at a time when most Americans were complaining about steady increases in fuel costs.

"They're taking away my security," says Mr. Bass of the new federal tax on oil revenues.

The windfall profits tax, which really has nothing to do with profits but is simply an excise tax on oil production, has not yet noticeably hurt the large oil companies. Second quarter profits show that earnings are less than they would be without the tax, but are nonetheless still rising handsomely. That is because in many cases the phased decontrol of domestic oil prices is raising income despite the tax.

But the tax, ranging from a rate of 30 to 70 percent is also levied on royalty owners. And for many of them, particularly small-scale owners who rely on the income for retirement or to bolster the family paycheck, it has been a serious financial blow.

Royalty owners are paid a share, usually one-eighth of the income from a well , by the oil producer. Often the royalty owner is also the owner of the land on which the well sits.

Sens. Lloyd Bentsen (D) of texas and David L. Boren (D) of Oklahoma are part of a movement in Congress to relieve royalty owners from some of the oil revenue tax. A recently passed Senate budget bill includes an amendment establishing a

Senator Bentsen has introduced legislation to exempt the first 1,000 barrels of oil per day from the tax for royalty owners and independent producers. That provision was originally part of the Senate version of the windfall profits tax bill, but was cut out in the process of reconciling that bill with the House version.

There is also legislation in the Senate to exempt royalty owners from the tax on the first 10 barrels of oil produced per day.

Legislative observers in Washington say there is no outspoken opposition to reducing the tax bite on royalty owners. But an aid to Senator Bentsen said royalty owners will pay some $1.2 billion in windfall profits taxes this year, and he reckons it will be hard to persuade Congress to give up this revenue source.

The reason many royalty owners have suffered an actual loss of income is that many own rigts to "stipper' wells that produce less than 10 barrels of oil a day. This category of oil was decontrolled in 1975, so the recent overall decontrol of oil prices has not benefited owners of the stripper wells.

Who are royalty owners? Scattered surveys taken in heavy oil producing areas of Texas and Oklahoma show a majority to be elderly, typically 60 years of age or older, and to be receiving several hundred dollars per month in royalty income.

Mrs. Miriam Fightmaster is convinced the tax was a result of a mistaken view in Congress and the Carter administration that everyone with any oil interests is "just sitting back and rolling in money." Her royalty income is off about 30 percent so far this year compared with last year. And she says, "Although I'm not destitute, I need the money."