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Oil Man Proposes Increase In Oklahoma Oil-and-Gas Tax
Hugh Pickens DOT Com (2995471) writes "Daniel Gilbert reports at the WSJ that Oklahoma oil man George Kaiser is breaking with fellow energy executives in asking the state to raise taxes on oil companies, including his own. 'Oklahoma is in desperate financial circumstances,' says the billionaire who controls Kaiser-Francis Oil Co. Kaiser says a higher tax on oil-and-gas production could help the state pay for education and much needed infrastructure improvements, and is asking legislators to return the state's gross production tax to 7 percent, challenging a plan proposed by fellow oil company executives who want to see the rate settle at 2 percent for the first four years of production.
Several energy companies and the State Chamber of Oklahoma say that lower tax rates for the costliest oil and gas wells are necessary to continue drilling at a pace that has stimulated economic activity and created other sources of revenue. Berry Mullennix, CEO at Tulsa-based Panther Energy, credits the tax program for helping his company grow to more than 90 employees, up from 18 a few years ago. 'I would argue the tax incentive is a direct reason we have so much horizontal drilling in the state today,' Mullennix says ... When companies decide to drill a well, they make their best guesses on how much it will cost to drill the well, how much the well will produce and what the commodity price will be. All of those estimates can vary widely, Kaiser says. 'With ad valorem taxes, the difference among states is 2 or 3 or 4 percent. The other factors can vary by 50 or 100 percent.' Compared with those other factors, Kaiser says the tax rate is incidental. 'It's a rounding error.'"
Several energy companies and the State Chamber of Oklahoma say that lower tax rates for the costliest oil and gas wells are necessary to continue drilling at a pace that has stimulated economic activity and created other sources of revenue. Berry Mullennix, CEO at Tulsa-based Panther Energy, credits the tax program for helping his company grow to more than 90 employees, up from 18 a few years ago. 'I would argue the tax incentive is a direct reason we have so much horizontal drilling in the state today,' Mullennix says ... When companies decide to drill a well, they make their best guesses on how much it will cost to drill the well, how much the well will produce and what the commodity price will be. All of those estimates can vary widely, Kaiser says. 'With ad valorem taxes, the difference among states is 2 or 3 or 4 percent. The other factors can vary by 50 or 100 percent.' Compared with those other factors, Kaiser says the tax rate is incidental. 'It's a rounding error.'"
Is this a real person or some long running RSS->Slashdot script. The posts are so broad and often asinine, can't be a person.
Not news, just laziness.
An oil tycoon wants to give more of his money away, on purpose! Truly this is the first sign of the end of days!
Good for him... He thinks he doesn't pay enough taxes... That's mind blowing.
Weird.
"Helping to keep you two steps ahead of the Thought Police!"
The other companies that argue higher taxes would scare them from drilling are full of crap. How about paying a fair share to keep the infrastructure well maintained and the populace well educated?
As the last line of the summary says. Compared with those other factors, Kaiser says the tax rate is incidental. 'It's a rounding error.'"
"No matter where you go, there you are." -- Buckaroo Banzai
How is this going to get him more money?
Taxation is the liberal's solution to everything. And oil and gas tax is a very regressive form of taxation. What percentage of his billions do you think him or the Cock brothers spend on gasoline or heating oil?
Ah yes. Our daily not news story from the left wing. If I wanted fake news I'd just go to MSNBC.
Looks like he is objecting to the tax rebates to encourage new drilling. Perhaps his oil wells don't qualify for the tax rebates and he doesn't want new competition?
...one of my favorite infotainers rush limbaugh was talking about this very meme yesterday on his show.
it was an idea based on an article here that postulates that super wealthy individuals propose liberal ideas not because they really believe them, but to shield themselves from criticisms from the media.
so it's basically a 100% political act, which really makes a ton of economic sense for this guy...it's not like these tax increases are gonna affect his life in anyway.
i must say...due to the timing it would seem that mr. kaiser is a rush fan.
never bring a twinkie to a food fight.
This is the guy who bilked half a billion from the American taxpayer.
Berry Mullennix, CEO at Tulsa-based Panther Energy, credits the tax program for helping his company grow to more than 90 employees, up from 18 a few years ago. 'I would argue the tax incentive is a direct reason we have so much horizontal drilling in the state today,' Mullennix says
It would be far more efficient to tax the damned company and keep it at 18 people and use the money to bridges and roads and schools. That would create far more than the measly 72 jobs created by that company.
Look, these entrepreneurs are hard negotiators. If the taxpayers start with, "please please please create some jobs", they will ask for an arm and a leg. You give them an arm and a leg they will be back next year, "an arm and a leg? That was last year. What are you gonna give us this year?". You give another arm and a leg. And the year after they ditch you and go to the next country or state or country because, "your state has people without arms and legs, we can't employ them".
There is plenty of capital. If this Panther Energy does not want to invest there will be a Jaguar Energy or Tiger Energy. The capital markets are sloshing with 3 trillion dollars not knowing where to invest. Tell them the same thing they tell their employees, "this is what this job pays, if you don't like it, keep moving there are plenty who would work at this wage". Well, "this is what costs to do business in our state. If you don't like it, keep moving there are plenty of other investors for us". Unless the tax payer negotiates like this, you will not get anywhere. These crony capitalists invest in the election system, and get their own shills elected as legislators and government executives. That is why money in politics is so insidious.
What we now lack is demand. That is what is stifling the growth. Not the lack of capital, Not the lack of labor (lack of labor would lead to wage inflation). What we need is tough negotiators to represent the tax payers in the government.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Taxation is the liberal's solution to everything. And oil and gas tax is a very regressive form of taxation. What percentage of his billions do you think him or the Cock brothers spend on gasoline or heating oil?
What percentage of your life do you and other "progressives" spend worrying about other peoples' wealth?
Fact of the matter is, our tax rates are too low to cover our preferred lifestyle. Full stop.
So if we'd like to continue living in the manner we're accustomed, taxes absolutely positively have to go up. And the pain of that needs to be allowed to flow down from the top to the lower class just as it has throughout the millennia, without monetary meddling.
Anything short of this will result in the eventual collapse of the system. There's simply no way around it.
And that's the thing that bothers me about the Blue Team and their 'denier' slander they love to toss around. If you think we can keep on spending the way we have been and rely on the rich to bail us out, you're as guilty of magical thinking as the 'climate deniers'. You'll take your preferred scientific paper as gospel needed to change the world, sure no problem. But math? Nah, we don't need to believe in that heresy!
At least the Red Team is just greedy. That's easy to understand, and easy to anticipate.
I think they are raising taxes on the oil and gas companies and not directly the oil and gas that consumers purchase. However, to your point they probably spend a very little percentage of their billions on gas or heating oil but that's not what the article is about.
Compromise the customer to win.
Oklahoma is one of the most conservative states of the Union. Instead the state government, under pressure from jerb creators, will cut social programs and raise sales taxes, while cutting corporate income taxes.
Hail Eris, full of mischief...
E pluribus sanguinem
Yes taxes are evil. If they a not cut to zero the terrorist have already won.
Why raise taxes on oil and gas companies? Wouldn't it be more fair to increase the gasoline tax at the pump so that everyone pays for the bridge/road construction instead of having a select few pay? Same for property taxes and sales tax.
How dare the impoverished state of Oklahoma try to make the rest of America pay more for oil. Time to invade this agriculturally stunted land and then instead raise federal taxes to pay for our fight against this financial and economic aggressor.
First, increasing corporate taxes will ultimately increase the cost to consumers.
Second, we are currently sitting on the largest oil supply in over 40 years. Why haven't prices plummeted? I blame the speculators. Not those looking for oil, but the middlemen trading and making a profit on someone else's work.
If it were up to me and I was truly concerned with why we can no longer afford to fully fund education, I would be looking at where our Federal taxes are going and asking why we get nearly zero dollars back to states for education from the Feds.
I think they are raising taxes on the oil and gas companies and not directly the oil and gas that consumers purchase.
So how do you do one without also doing the other? Or to put it another way: if you raise the taxes of all oil/gas companies, what do you think those companies are going to do next?
It is a miracle that curiosity survives formal education. - Einstein
Dont be silly if they cut taxes to Zero - how are we going to fund the pork barrel that is the defense industry?
Corporations would like tax raised to 100% ie the return of having to shop AT their shop.
My bet is that he wants to go to 7% tax straight away instead of having the tax at 2% for the first four years because his wells are older than those of other companies and this tax structure would put him at a disadvantage? Unfortunately, more often than not when businesses push for regulations it's not out of pure motives but as a way to restrict competition.
+1.
Companies don't create jobs: *Demand* creates jobs. Companies merely respond to demand.
Besides, over 90% of new money is created by banks through credit, so there can't be a lack of funds.
No demand, no growth, no investment, no jobs.
Sounds like you want tough negotiations with oil production corporations getting tax breaks...so you can dump piles of tax money on construction corporations dreaming up scam "public works" projects. The only way to get government to spend tax money better is to make sure it has hardly any.
Not an unexpected proposal from a guy who already made his pile of money. Close the door behind him so nobody else gets to play by the same rules he did. I'd like to know how much money he would have had to pay in taxes if this were implemented when he was starting out.
Then don't worry, because the tax this man is proposing is neither an oil nor a gas tax.
It is an ad volorem production tax. It is not a point-of-sale tax. It's more along the lines of a VAT.
The idea is that there are enormous external costs that oil and gas producers pass on to people without their consent. These taxes are meant in a very tiny way to obviate those external costs. There really is no other way to do it. Corporate structure in the US economy has been mutated to make more and more of the costs of production external. And not just in the fossil fuel industry.
You are welcome on my lawn.
Texas has this issue too where Perry runs around to "over regulated liberal states", dishes up big tax breaks for them to put a plant in Texas, and ignores the costs while claiming all of the unrealized future benefits! Going to California and cutting a tax break to a small company of the tune of $50 million is a boon to that company but it makes no sense to the market or the state because they will never "create" $50 million in revenue for the state.
This behavior is stuff that creates bubbles and is just government deficit spending under the guise of "job creation". But that isn't their concern today is it because when the time comes that the business fails or overloaded infrastructure needs upgrades and expansions they won't have to deal with the raising taxes or a bond because they'll be long gone.
Prices are not affected by this type of ad volorem tax. The theory, at least, is that prices are set by competition and corporate tax rates do not enter into it.
As Republican Bruce Bartlett (Reagan Administration, George HW Bush Administration, staff of Jack Kemp and Ron Paul) reluctantly admits:
The owners of capital are the ones who pay corporate taxes, not consumers.
Now it's a moving target, because our corporate laws give lots of leeway to corporations to try to shift those costs to workers and consumers, so the level is always a moving target. Corporate tax rates are not "set and forget". If you're going to minimize companies externalizing their costs onto the citizens, you have to constantly fiddle with those rates, which is something that has Congress is willing to do in the era of big money politics.
You are welcome on my lawn.
I can patently say it won't matter either way. The additional tax revenue won't go to education, it won't repair the state's shitty roads, it won't help anyone. It will be pissed away into the pockets of crony contractors who don't seem to accomplish ANYTHING, in classic Oklahoma style.
Have the Fox News talking idiots called him a socialist yet? A while back Warren Buffet said that he thought people like himself (rich) ought to pay more in taxes. And right on cue, those talking idiots started calling him a socialist. Can you believe it, Warren fucking Buffet a socialist! "I don't think that word means what you think it does."
That's nice he's donating money to parks, when there are schools with leaking roofs. And some schools in TPS, Burroughs for example, send children home with food so they will have something to eat over the weekend.
Much of Tulsa lives in the poverty that's equal to any major inner city slum and this joker is building parks so that affluent people can say what a wonderful person he is.
Nothing stops him from paying more in taxes then required. But if they want to increases the taxes by 5% I'm sure ND would welcome them to drill here. The taxes directly from oil companies that have much impact. It is the jobs they create that helps the state the most. Adding 1000 jobs means 1000 less off welfare and 1000 more paying taxes which has more meaning then seeing a big tax number from oil companies. A lot of the tax dollars will be wasted anyway.
This guy dose not want to have taxes raised on oil because it is the "right thing to do" he has something planned to take advantage of it. If he really wanted to improved schools he would suggest making schools into charter schools, just pouring money into schools do nothing.
72 more employees doesn't really matter when the state is going to hell. If it was enough employees to make a difference in state revenue, they would have a point.
The Kruger Dunning explains most post on
There's nothing stopping this fool from paying higher taxes now. The IRS certainly isn't going to argue. So why try to get the government to FORCE everyone to pay extra? He's got such a good heart for helping fix his state and all... so why can't he just fork over a check to the IRS for the difference? I call BS. There's some end game at play here and all the cards are NOT on the table.
What percentage of your life do you and other "progressives" spend worrying about other peoples' wealth?
What percentage of that wealth is stolen from our pockets and bank accounts?
It would be nice if the Oklahoma Legislature would use some of this money to halt its war on education. With 22% annual budget cuts, Oklahoma schools aren't doing so well.
http://newsok.com/report-oklahoma-leads-nation-in-percentage-of-cuts-to-school-funding/article/3882174
Or to put it another way: if you raise the taxes of all oil/gas companies, what do you think those companies are going to do next?
That's great, except no one is talking about raising taxes on ALL oil/gas companies. Kaiser's proposal affects the rate levied on producing wells in Oklahoma. The proposal will have virtually no effect on overall oil/gas prices, much less prices at the pump.
Personally I'd like to see the IRS eliminated and the Fair Tax Act implemented.
It's a consumption tax on retail sales with a modestly complicated "pre-bate" scheme to help low income folks with the increased sales taxes. Not complicated to understand what it is. There is plenty of disagreement however regarding whether it is a good idea. It's (probably) progressive on consumption but regressive on income. It also would effectively become a very large entitlement program similar to social security. I don't see it as any more "fair" or sensible than any number of other tax schemes I've seen. Just because they title it "Fair Tax" doesn't mean it actually is better or more fair.
As you hinted discussions of "fairness" tend to leave out clear definitions of what they mean by fair - fair in what sense? Percent of income? Percent of purchasing power? Percent of wealth? Some combination? There is no tax strategy anyone has devised yet that will be "fair" under every possible measurement. The best you can really hope for is a sort of least-worst scenario which optimizes tax revenue (not too high or too low) without unduly burdening any single segment of society but that's more of an aspiration than a realistic scenario.
...one of my favorite infotainers rush limbaugh was talking about this very meme yesterday on his show.
Because Rush is obviously an unbiased source of rational analysis... No chance at all that he would try to twist an event to try to bash liberal ideas. [/sarcasn]
postulates that super wealthy individuals propose liberal ideas not because they really believe them, but to shield themselves from criticisms from the media.
Or maybe we go with the simpler explanation that many of them actually believe what they are saying. It is possible to be wealthy and have liberal ideals you know. It's not like this guy is really in need of shielding from the media.
i must say...due to the timing it would seem that mr. kaiser is a rush fan.
Lots of people like to have their biases confirmed. Doesn't make them correct however.
The theory, at least, is that prices are set by competition and corporate tax rates do not enter into it.
No "theory" is required. There's plenty of empirical evidence that when a local tax is applied to the production of a globally traded commodity, there is virtually no effect on the price of that commodity.
Of course, what happens to the level of production within the tax authority is another matter.
Such abuses of government are common place amongst the top dogs in any industry. This guy, is undoubtedly seeking government assistance is making it harder for smaller operators to enter the market. By raising taxes he effectively makes it harder for anyone but the biggest companies in the market to succeed. It's despicable and is one problem with our form of capitalism, where government is used as a tool to keep others out of the market.
There's nothing stopping George Kaiser and Warren Buffet from paying more than the going rate in taxes. If they want to donate more money to the government it wil not be rejected. It's imoral to create laws that force others to spend their money in any particular way.
This sort of thing should be called out for what it is. Racist. You're a racist. No political correctness here. You're a racist asshole.
Did you READ the article? It's a rounding error on their profits. So says the Oilman HIMSELF.
State officials speak about oil jobs as if it is some long term industry, that will be around forever and should only receive praise. These jobs will vanish, just as fast as they were created when the oil wells dry up and you will be left in the same place you were twenty years ago. The oil companies aren't doing this as a favour you know, they want the money that oil brings them and will dump you in a second once the tap turns to a trickle.
We all know that businesses really don't pay taxes, right? I mean they do, but the companies charge more for their products and services as a result of paying taxes. There's not a single business around that just eats that cost. My point is that it's not like this man is voluntarily giving up money. He will still make just as much money.
Everyone who uses oil and gas products will pay a higher price because of this. I'm not saying that's good or bad - that's not the point of my post. I'm just trying to point out that everyone pays for business tax increases, not just the businesses.
"A plan fiendishly clever in its intricacies"- Homer Simpson
Corporations would like tax raised to 100% ie the return of having to shop AT their shop.
Double zero is still zero.
How come every time a nation / state / city is overspending, people always immediately turn to how to raise more tax revenues? How come virtually no one ever looks at the other side of the math and looks at ways to cut spending? If you're in a dire financial situation, your first move is to cut all non-vital spending and then reassess the situation. For some reason, people don't think government spending should ever decrease.
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." ~Thomas Jefferson
You're partially correct. The amount of tax that a business will pay is directly related to the elasticity of demand for their products / services. The more elastic the demand (the more people are willing to either buy a competing product or just do without it), the smaller the portion of the tax that they can shift to consumers. The less elastic the demand, the higher the portion of tax they can shift to consumers. If the government decided to levy an additional 10% tax on potato chips, the potato chip companies would have to eat most of that tax because most people would simply buy other snack foods instead of paying the higher price. If the government decides to levy an additional 10% tax on gas / diesel, consumers are going to be hit with all of that extra tax because most people don't have a choice in buying fuel (long term they can make other decisions to decrease the amount of fuel used, but that's a long story there).
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." ~Thomas Jefferson
One billionnaire is'nt a fully selfish guy, and understands the need for state financed infrastructure and services. How does this qualifies as stuff that matters? There are others in the same mood.
Is this place becoming a libertarian shout house or what?
I am not Remy Mouton, unfortunately: http://remy.mouton.free.fr/art/
If the state is in dire straits, he should donate some of his profit to help it. Why should the tax payer take on even more of the corporate welfare debt?
Kaiser users his charities as a tax write off and then funnels money back into his for profit businesses from them.This guy spent much of the 80's-90's "buying" dead and dying companies so that he could use their losses to offset his gains and pay zero taxes on his profits. http://www.bloomberg.com/news/...
What is going to happen next is that Oklahoma will spend money on roads that the oil industry uses and services that will make the state a palatable place for oil workers with families to live, thereby creating a reliable supply of skilled employees. New drilling projects become more reliably on time and on budget, thereby reducing the effective risk.
The competent oil men whether the 5 year projects overrun budget and take 7 years to complete, because deliveries are always late and their best employees have fled to Canada. The tax being discussed is a rounding error, in context.
Isn't the tax increase just passed onto customers as higher rates? How does this help? Wouldn't the same thing be achieved more efficiently by raising the income tax?
In any case, why would Gilbert care? It's not his money.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
If we want the owners of capital to pay taxes, then we don't need to tax corporations (and rely on unproven economic theories to assure ourselves that the cost won't be passed onto ourselves). We need to tax capital gains directly.
I suspect, in fact, that once we start doing so, we could institute flat (and relatively low) tax rate for personal income, get rid of sales taxes and minimum wage (and other forms of regressive taxation), and just go over to universal basic income guarantee - and still have plenty of money to spend on infrastructure, public welfare, science etc.
A rich asshole who has everything life has to offer feels guilty and proposes liberal ideas. No! Say it ain't so! That's SO unique!
Wrong! Headline reads, "CEO of an established oil company, seeks to eliminate subsidy on new competitors, while pretending to be self-sacrificing."
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
Governments of countries like Somalia, Nigeria and Sudan have already reached your ideal situation of having hardly enough money. Strangely enough they don't seem to be having thriving economy and fantastic growth. Think about it.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
I have to wonder [with a considerable degree of skepticism] just how "many" jobs are created with all the corporate tax reductions that's been going on for thirty years now. Six employees here, two there, ten more here and there. Taking into consideration the degradation of the U.S. infrastructure, the nation's secondary education system, environmental management and protection, financial market oversight, etc. I'd have to seriously question whether or not the "give-backs" to corporate America has in the scheme of things actually benefited the U.S. We here a lot about a few jobs here and there but compared to what has been lost or undermined, it certainly is not an equitable trade-off as far as I'm concerned.
"Those who can make you believe absurdities can make you commit atrocities." - Voltaire