Skip to comments.What Palin Really Did To the Oil Industry
Posted on 08/22/2011 8:17:41 AM PDT by The Bronze Titan
Oil companies in Alaska are paying more money in taxes than ever before. The state's oil and gas tax revenues for its just-ended fiscal 2007 topped $10 billion. That's twice as much as fiscal 2006 and four times more than 2004. Some supporters of Barack Obama see that money coming in and say that John McCain's running mate, Alaska Gov. Sarah Palin, must have done what Sen. Obama wants to do -- sock those companies with a big fat windfall profit tax. This is a deeply misleading reading of her 2007 tax reform.
(Excerpt) Read more at online.wsj.com ...
So what exactly is your job with the Romney campaign?
I didn’t take it as a gratuitous slap but that’s JMO. I took it as Kay Cashman’s effort to stay in the good graces of Sean Parnell.
At any rate, the legislature said no without more data that ACES was impeding new exploration. As the link above indicates, no such data exists. Parnell is just wilting under the pressure from the Big 3 and their buddies in the Corrupt Bastards Club.
Will the legislature hold firm next session? Who knows. If Palin is on a path that will take her to DC, they might flinch...LOL.
2005 - $5.8 billion
2006 - $6.3 billion
2007 - $6.5 billion
2008 - $6.5 billion
2009 - $6.6 billion
might flinch = hold firm.
Governor Palins key legislative victory, Alaskas Clear and Equitable Share (ACES) , has been a transparent, constitutionally-based, pro-growth success. In 2007, Governor Palin signed into law ACES, an oil tax structure that includes incentives for development and investment in capital improvements and ensured that Alaskas resources would be developed for the maximum benefit for the people of Alaska as per their state constitution. The Alaska constitution states that the states natural resources belong to the people of Alaska."
-"If anything, the taxes collected should be put in a lockbox for future generations ... but even that is supect.
ACES has been a success for both the people of Alaska and the oil companies. In a recent Facebook post, Governor Palin highlighted how the revenues of ACES have benefited the people of the Alaska and have made the state financially sound, as it has helped provide a $12 billion state surplus, put billions is savings, pay down underfunded state pension plans, and forward fund education. ACES has proven to be a success for oil companies as well. ACES has contributed to oil job increases, high profits for industry, a record high numbers of oil companies drilling in Alaska, and increased capital development by oil companies spurred by $3 billion of tax incentives. Alaska now has the second best business tax climate in the country, moving up two spots since the passage of ACES.
In principle I am against this approach.
It is a bottomless slippery slope. If it is OK to tax (confiscate) one sector and simply hand the money over to another, where does it stop? Why don’t the recipients simply vote to raise the tax level and award themselves even more money?
Is this really any different than the liberal “tax the evil rich and give to the virtuous poor”?
Can people envision the near limitless ways this could be applied? Like all government giveaways, it’s great if you are the recipient, bad if you are the involuntary donor.
This could be applied to any industry that could be painted as doing nothing for its profits. Which is pretty much everything as far as libs/socialists are concerned.
It’s pure socialist redistribution at its finest.
“They actually get a check at times if I am not mistaken..at least they claim it on Alaska boards. Are we advocating that on a conservative forum. I have serious hesitation about that. Taxing business to hand out cash to folks.”
So, each alaskan receives a cut of the taxes generated from companies that do business there?
The State collects the taxes and redistributes them to citizens?
The citizens get the money just because they live there? They don’t do anything to earn them?
How is this conservative?
Technically, this is a production tax. The royalty tax is a separate tax to cover the resource itself.
It should be noted that Parnell is working to lower this tax and to change it to a tiered tax system to encourage more production, because the current tax appears to be stifling new production because it can take up to 42% of the profits (again, that’s not including the royalty payments).
Remember that when Palin put her new tax in place, oil prices weren’t nearly as high as they went in late 2008; so what looked reasonable before now is too high a tax rate with the higher oil prices.
This money is from the mineral wealth of the land, something that is owned by the people. And up here in Alaska, mineral wealth is all you have. You cant grow crops, or make lumber, if it ain't mined it just ain't.
How do you share the mineral wealth? Do you just hand the oil over to chevron and say good luck guys? Have a nice life as billionaires? Do you tax them and build roads and schools? Well then, how much do you tax? Do you just say to the government, good luck guys, have a nice life as millionaires and throw us a school or something once and a while?
How about we let the people decide on what to do with 1% of the money taken in! Perhaps people know best what they personally need to survive in this harsh climate. So the Dividend fund came to be. It was done back in the day when people did not trust government as much as we seem to do now.
Might I ask, just how is that hopey changey thing doing down there in the lower 48? Think you might know how to spend your taxes wiser than Obama? Not interested in the mating life of three toed frogs but do want to pay your doctor bills?
In Alaska they know that true stimulus is not having the government spend every dime in everyones pockets.
The people of Alaska OWN the oil in the ground.. NOT THE FEDERAL GOVERNMENT or the oil companies.. The oil companies must PAY to get it out.. and sell it..
The federal gov’t trying to siphon off some of the proceeds is OBSCENE,,, Unconstitutional and just WRONG..
The federal government OWNING LAND in any State is WRONG...
The federal government should OWN only what the States ALLOW THEM TO OWN..
NOT THE OTHER WAY AROUND...
"ACES represented a major philosophical shift in the role of government. As resource owners, Alaskans literally had a "working interest" in energy exploration and development. Traditionally, the sovereign's role is to passively collect resource royalties, but under this value structure, we would shift towards an active role in incentivizing resource development. Our state and nation needed it. Ours ACES proposal would provide more value to Alaskans when the price of oil was high but would provide substantial relief to the oil companies when prices fell.
In the special legislative session held in October and November 2007, legislators on both sides of the aisle agreed with our approach. The measure passed with overwhelming public support. Of course, I took political hits as the oil companies launched a smear campaign that we were raising taxes on the industry. But we persevered, and I'm glad we did. A year later, vindication came when industry officials admitted that the legislation was working and had even significantly increased their profits while spurring them to invest more in exploration and new development in Alaska. We had struck that sweet spot where industry and the public interest were mutually served."
Your understanding of the payments to Alaskans is flawed. The people own the land NOT the oil companies. The oil companies are paying a usage fee to the citizens not a tax. If you owned a 100 acre farm and another farmer used 50 acres of it, you would expect a portion of his profit. Same concept.
Thanks for your take.
You may have heard that Sarah Palin raised taxes on oil companies in Alaska when she was governor, but what most people don’t know is how economically smart her tax plan was. In a nutshell, here’s how it’s structured: when the oil prices are high, the tax is higher; when oil prices drop, the tax drops. It provides an incentive for the oil companies to keep oil production high, which keeps oil prices and, therefore, gas prices low. It’s very smart. More from Cary Wesberry:
Former state Representatives Pete Kott and Vic Kohring have been convicted taking bribes from oil company executives in Alaska. Using the oil profits tax passed in 2006, these politicians literally used their offices to steal money from the citizens of Alaska. Governor Sarah Palin would have none of it, and set to work to correct the problem and return that money to Alaskan residents...
Governor Palin did what any conservative worth their own soul would have done. She gave tax dollars that were literally stolen from Alaskan taxpayers right back to them and appropriately reversed corrupt tax policy. Not only did she bring ethics back to the tax policy in regards to the oil industry in Alaska, she improved the policy itself in her proposal.
The tax raises when oil prices are high, and falls when oil prices are low. This give amazing incentive for the oil companies to produce more oil, which increases supply, and lowers prices for everyone including the taxes they themselves pay the state. When oil prices are low the tax moves to a 10 percent tax on the gross, instead of the net tax of 25% when prices are high. Instead of, not in addition to. The oil companies in Alaska with the Palin proposal pay the state minus their operating expenses along with pipeline and tanker charges. In this way, the oil companies are not taxed for the cost of doing business.
The feds have further exploration locked up, so the oil will continue to taper off as the present fields go dry. You could stop all taxes and that will not refill the fields.
Drill new fields and you get more oil. No drill and the pipe runs dry. Fact of life
Big difference: Exxon, Conoco Phillips, BP etcetera DO NOT OWN A DROP OF OIL in Alaska.
It is all owned by the people of Alaska,and they can drive whatever bargain they want when they sell it to the oil companies. It’s called free trade.
In the lower 48, the great majority of mineral rights were sold long ago, not so in Alaska, where mineral rights, with few exceptions, were never sold, and are retained (according to the Alaska Constitution) by the citizens of Alaska.
Actually, I write them and enter into them
Nothing like an escalation factor.
We do have floors, just as similar to what is described except
The floor in our case is a fixed dollar amount and if the business makes more than a certain amount is is a percentage of the gross - losses (theft/fire/etc..)
This sounds like a percentage kicker that increases logarithmically, I wouldn’t ever agree to that no matter how good a location it is unless it was tied to improvements that were going to be made that is expected to benefit the business. Example: Adding a parking structure to allow more customers
I get all that, you haven’t told me anything I don’t know, but on top of this 25% there is an addition of an “escalator clause”
What the hell is that?
Everything I am fine with that you described.
Handouts are not pure capitalism bray. Government always makes royalties off public land resource exploitation and offshore...that is not the question.
Does any other state do it?
Why not just reduce state budget tax needs instead of giving out cash.
I find it a serious question for a conservative forum and it is not about Palin..she only gets credit for making them more honest in their accounting..the Permanent Dividend has been in place since 1976
OK, thank you for enlightening me. It seems I need to do a little more research on this subject before I finalize my opinion.
Oh, and BTW, I appreciate the courteous manner of your response; as opposed to insulting me for my difference of opinion. Which happens more than it should here.
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