Saturday, July 21, 2012

Severance Tax Counterpoints

A conservative in Ohio has no shortage of union-funded foes, so I try to avoid arguments with friends. But I want to note that I still think the governor's severance tax proposal is a bad idea.

For the legion of 3BP readers who have been marching outside 3BP Global Headquarters chanting "WHERE IS JASON?" and for the benefit of anyone just discovering the site, I've been critical of the governor's plan in work for my day job at Media Trackers Ohio. Lest anyone think this is a case of me trying to draw some silly line in the sand, keep in mind the proposal is also opposed by AFP Ohio, the Ohio Liberty Coalition, and the National Taxpayers Union.

Several weeks of researching this topic have hardly made me an expert on the oil & gas industry, so let's just look at the logic here: the governor is proposing we raise taxes on a specific industry to fund an income tax cut statewide. That's the absolute bottom line, when you distill the issue. Is this something conservatives ought to support?

Big Oil, with Ohio taxpayers innocuously along for the ride
The governor has alluded to the many aspects of Ohio's government that remain broken, so why double down on the severance tax proposal when it faces broad opposition? Why not use the power of the bully pulpit to drive repairs to one of those other innumerable broken things?

Obviously an income tax cut would be great for businesses and individuals, but I'm baffled by the decision to make a small income tax cut paid for by a tax hike on fracking the metaphorical hill to fight on. Needless to say, I resent the implication that any opposition to the plan means opponents are in Big Oil's pocket.

The administration assures us that even at the rate the governor proposes, taxes would be outrageously low and wouldn't deter investment. If that's the case and the administration knows the exact point where investment will be deterred, why not push the rate higher? After all, the tax revenue is going to be used for a tax cut.

That's a big part of my personal opposition: Governor Kasich's populist don't-let-the-oil-barons-drink-your-milkshake sales pitch veers into the territory of, as AFP puts it, "picking winners and losers." Regardless of who's in office, I'm suspicious of suggestions that we can make Ohio better with revenue-neutral number juggling.

Completely off-topic, did Blogger make the visual editor worse again? I must be spoiled from using WordPress, because every time I log in to Blogger it seems like the editor has been zapped again with a de-evolution ray.

...and with that reference to the live-action Mario Bros. movie I've mercifully forgotten most of, everyone have a good weekend!


  1. How much revenue does Texas collect from severance? That would $1.5 billion a year. How much in Ohio? About $11 million (2 cents per barrel). Oil producing states levy the tax, so it's legitimate public policy. And I'm not seeing oil companies leaving Texas, are you? Or are you saying what's good for Texas is bad for Ohio?

  2. Just a reminder to readers: 3BP officially supports the proposal (see our arguments in previous posts), even though Jason is compensated by his employers to write articles opposing it.

    As for blogger, yes its getting worse not better. We plan to migrate to WordPress this year :-)

    1. In case it wasn't crystal clear, I was neither compensated for nor instructed to write the above 3BP post. It represents my opinion - no more, no less.

    2. I think it is very clear that this blog promotes and defends all things Kasich. It couldn't be more apparent. However, conservatives across the state are speaking out and standing up to Kasich's wealth redistribution tax hike scheme and calling it out for what it is - a politically motivated tax hike on a segment of business (in this case oil & gas) with the proceeds being used for an income tax cut, which is akin to populist honey butter spread on a biscuit.

    3. Anonymous uses the old Alinksy-style method of debating. Attack the people making the argument and not the argument itself.

      The only people I see speaking out are the lobbyists and the people like Jason who are paid to have the same opinion or are suckered into it by deceit.

      There is a reason we haven't seen one industry spokesman come out against this thing. It's because they don't care. They are coming and this tax isn't going to stop them.

    4. Favorite comment so far! An anonymous commenter critiquing another anonymous commenter's "Alinsky-style method of debating" - and then in the next sentence saying I'm either a sucker or a paid shill for Big Oil.

      Projection: it never stops being funny.

  3. This is one issue I am waffling about. I understand both sides and agree with some of what each side has to say. Jason, I appreciate you saying your piece even if it goes against the grain.

    1. Thanks, Bryan! As you can see from the commentary at 3BP versus AFP Ohio, OLC, NTU, and to a lesser extent ATR, my opinion on this issue goes against the grain more in some venues than in others.

  4. This is an odd post. Hart can't argue the new severance tax would dissuade oil and gas from coming to Ohio. He also talks out of both sides of his mouth by saying an income tax cut would be great for business, and then he mocks the size of it.

    Side note: Since when was at least $500 million a year into the economy "small"?

    I guess I just don't understand the opposition to it all. For pete's sake, Rick Perry has a severance tax in Texas that's much higher. Is he not a conservative?

    Ohio's income taxes are too high. This is an obvious way to help lower the burden. And it's something the oil and gas guys pay everywhere else. Why should Ohio be the exception?

    Hart just uses a lot of words to say nothing.


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