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The rich
get richer
As it turns out, we couldn’t tax the
oil companies enough to make them leave
Alaska if we tried. (Well, maybe we
could, but you know what I mean.)
Why? Well, according to a big-time
consulting firm hired by Gov. Sarah Palin’s
administration, Gaffney, Cline
& Associates:
[The]
[d]rilling program [at Prudhoe Bay ] is so
profitable that under even the most extreme net tax structure, oil
companies would want to continue their reinvestment.
What does that mean in plain English? It
means the companies will make so much money from future investments to get
more oil from Prudhoe Bay that they’ll make a considerable profit
even at really, really high taxes.
So if you are among the – oh, I
don’t know – half a million Alaskans who wish Exxon
would just go away, bad news. They ain’t going anywhere no matter
what kind of tax bill we pass.
You can read more about the Gaffney, Cline
report here.
More on the
(H)O&G bill
If you are feeling wonkish, you can get
more detail on the changes the powerful House Special Committee
on Oil & Gas, of which I am a powerful member, made to the
governor’s bill here.
If you’re not, a fair summary is
this: It raises
less money than the governor’s bill until 2013, when, if prices
are high, it raises more. And changes in some provisions make the bill
better for producers and worse for explorers.
The Spirit
of Ramona
I was taken over by the spirit of Ramona Barnes
this week. Ramona was a famous character in the state House, known for her
combination of toughness and, shall we say, a flair for the dramatic. I got
to know her a little bit when I was still working as a newspaper columnist.
One time, when everyone was all atwitter about an eruption of
Mount
Ramona , I ran into her in the hall.
Heard you provided some fireworks today, I
said.
Ramona gave me a grin.
Yes, she said, I pitched a fit and fell in
it.
I did the same on Tuesday. Here’s
why.
All of the discussion about the effects of
various kinds of taxes is based on computer models. The computer models
contain variables, places where you can plug in numbers and see how a tax
plan works. In order to compare, say, a tax rate of 22.5 percent to one of
25 percent, you have to keep all the other variables the same. Among those
variables is how much it costs to produce a barrel of oil and what kind of
credits the taxpayers can claim to lower their payments.
The importance of the models is that you
can compare changes, not that the models reflect reality. If you’re
like me, and you’re struggling to make sense of all of this, the
worst thing that can happen is for somebody to start changing the
variables, because then you can’t compare what they are saying to
anything that’s been said before. Instead of comparing apples to
apples, you’re comparing apples to bananas.
So I was really careful not to let anybody
get away with changing variables to make their position look better. When
they tried that in testimony to the powerful House Special Committee on Oil
and Gas, of which I am a powerful member, I told them not to do it. That
happened more than once.
Imagine my irritation when I figured out,
after the fact, that a consultant had done just that. In showing us how the
tax plan the majority of the committee favored compared to the current tax
law and the governor’s proposed tax law, he changed the assumptions
in a couple of ways. One made the governor’s proposal look worse. The
other made the committee’s proposal look better.
So, in the House Democrats’ press
availability on Tuesday, I -- to quote the inimitable Ramona Barnes --
pitched a fit and fell in it.
If you saw any of that and are wondering:
I’m feeling better now.
More later.
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