Posted on 09/04/2008 6:57:35 AM PDT by steve-b
Who is doing CATO’s research?
I did some web searches and learned that the increase was only 2.5% and raised the tax from 22.5% to 25%, hardly what could be called a “windfall profits” tax. But that’s what the liberals are calling it, although their idea of a windfall tax increase is a rate of 50%.
I also discovered that at the same time she called for the bump in the production tax, Palin increased the tax exemption for exploration from 20% to 30%, which offsets the 2.5% production increase to some degree. At the very least, it negates the production tax increase as a factor which would lead the oil companies to cut back on exploration.
I found that the 22.5% tax had been levied by Palin’s predecessor in the Governor’s mansion and his cronies, and the deal they worked out with the oil companies to set the 22.5% amount was soiled by corruption. It was causing an $800,000 shortfall in the state’s budget deficit and was selling Alaska’s valuable natural resouces on the cheap.
One last thing - the tax only goes as high as 25% when the market price of oil is very high. When the price drops below a certain threshold, the production tax rate decreases also.
Exactly. Cato is banking on the fact that because EVERY other state in the nation has a state income tax or a state sales taxes (and all but a handful have BOTH), the reader will assume that Alaska does also.
It is IMPOSSIBLE to cut taxes that DO NOT EXIST and both the author of and the FReeper who posted this hit piece know that but aren’t about to let it get in their way.
I see. So your argument is that the exploration subsidy from the Alaska taxpayers should be raised, but the severance tax should not be.
The Alaska taxpayer should put more money in, but should not get more money out.
shouldn’t the companies that actually take the risks to work on the oilfields, be the ones to own them? The companies should be the ones subsidizing exploration, not the govt.
there should be no subsidies
Some idiot on another forum was claiming that states should not even own natural resources. I think the proposition is that states should just give away their wealth to private industry which can exploit the resources much more efficiently.
Amazing the amount of crap that tries to go under the rubric of conservatism and libertarianism.
The oil fields are owned by the PEOPLE OF ALASKA, are you suggesting that FREE MARKET FORCES should be ignored? There is NOTHING mandating any oil company to do business in Alaska.
OK genius. You go to Alaska and run for governor on the platform that the wealth of the state should be given/sold/auctioned off. I think you will learn that dressing out a carcass for dinner doesn't mean the same thing there and here.
The oilfields are owned by the people of Alaska, are you suggesting that private corporations should be allowed to seize them?
Amazing. The oil companies are free to pack up and leave if they think they are unable to make a reasonable profit.
Da, Comrade.
They were not expropriated from any private landowners.
They were purchased legitimately by the US government from their previous owner, the Russian Empire.
They were given to the citizens of Alaska by the US government as an incentive to encourage the population growth and productivity of the Alaska territory.
The Alaskan taxpayer does not want to sell his property to energy companies, but wants to keep it.
He is willing to allow private companies to bid for the contract to extract energy from his property, and is also willing to invest (or subsidize) contractors in order to maximize the utility of his property.
A better way to think of the Alaskan oilfields is as an asset owned by a corporation whose shareholders are the citizens of Alaska and whose board of directors and management team are the elected officers of the Alaskan state government.
The management team decides when and how much to invest in (subsidize) energy exploration and also when and how much cash flow to return to investors (tax).
The investors (Alaskan citizens), like investors in corporations, have the right to vote for company officers and to receive dividends from the asset they own.
They are under no obligation - legal, moral or otherwise - to sell their asset to any other company.
Isn't this pretty much what was done in Russia in the early 90s? The result was staggering graft and corruption even by Russian standards.
Hell, sell EVERYTHING off throughout the country -- I want the beaches in Hawaii but NONE of the municipal infrastructure. I'll also take the Mississippi, but none of that bridges or other infrastructure for that either.
When you get right down to it, it's just like any other concession.
If you own a Burger King and want to put it in a mall, they are going to charge you rent, you don't get to own your part of the mall. If you make money, you will stay AND from time to time your rent will go up.
It's called CAPITALISM.
Are you suggesting that state property can be seized by private corporations?
Alaska's oilfields were not seized, Communist-style, from their legitimate owners.
They were purchased in a negotiated transaction from their legitimate owners, and the new owners voluntarily deeded them over to the citizens of Alaska as an incentive for the citizens of Alaska to undertake actions that the deeding owners considered sufficiently remunerative to them.
Unless you believe that the power of the federal government to acquire territory - a power enshrined in the US Constitution - is somehow Communist, there is no reason to make such a false implication.
Wish Oklahoma had a negative tax rate. The Rainy Day fund has been filled in Oklahoma and running over so instead of giving us back money, they will find more ways to spend our tax dollars is my guess.
Well, that's Russia all over.
If the citizens of Alaska want to sell Alaska's assets to the right bidder, more power to them.
But they did not acquire those assets illegitimately and they are under no obligation to sell them if they decide not to.
If enough Alaskans want to put these assets up on the auction block, they have the constitutional means to do so.
The concept of public control of a vital resource (such as mineral rights) is not a conservative principle. It is not just Alaska asserting public control. The federal government, Indian tribes, and some other state governments also assert control. Public control does not establish private property rights. Public control is socialism. The political process rather than the market determines the price of mineral rights. Conservatives have long called on the federal government to sell or auction land and mineral rights so the idea of establishing private property rights is not new.
There is a columnist who claims that the combination of royalties and severance taxes is 75% of the price of a barrel of Alaskan oil. I am not sure about the source of this percentage. If this percentage is close to the actual amount, it is excessive taxation. It will discourage production if oil prices do not remain very high. I consider the royalties as a form of taxation. Government determined royalty rates are arbitrary compared to market determined prices.
I am a strong supporter of Sarah Palin. Her support of this tax structure in Alaska is ingrained into the state constitution and the minds of Alaskans. I cannot fault her for supporting tax increases on the energy industry. Alaskans are effectively taxing non residents for a large part of the cost of state government through the combination of severance taxes and royalties. Of course, this policy is popular in Alaska.
I am concerned that other states will use the Alaska model. The result could be much lower energy production. Other states are looking very carefully at the Alaska experience of taxing energy development. Both McCain and Palin have expressed strong opposition to increased energy taxation at the federal level. The state level is a different issue. There seems to be strong support for much higher energy taxes at the state level.
However, if they were smart, they would realize that the proceeds of the sale would eventually be spent and then they would have to start paying income tax and sales tax. They would be INSANE to sell them.
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