Alaska Permanent Fund

[hugo]

Info for people that can read:

 

Monday, August 11, 2008

Lessons from Alaska?s Windfall Profits Tax

Just because someone else does something stupid, doesn?t mean you should do it as well.

 

Most parents, at some point in time, have told their children something along these lines. I heard it from my mother and father, and I?ve said it to my children as well.

 

The same lesson applies to public policy.

 

The August 10 Seattle Times ran a piece ? titled ?Windfall tax lets Alaska rake in billions from Big Oil? by Angel Gonzalez and Hal Bernton ? worth reading about the state of Alaska?s tax on oil companies. Alaska politicians love the tax ? in fact, they recently hiked the levy ? but does it make any sense in terms of sound energy policy?

 

The article explained: ?Over the opposition of oil companies, Republican Gov. Sarah Palin and Alaska's Legislature last year approved a major increase in taxes on the oil industry ? a step that has generated stunning new wealth for the state as oil prices soared.? This point is mistaken. Taxes do not generate wealth. Instead, by sucking resources away from the private sector, taxes discourage new wealth creation. Instead, taxes can generate more revenues for politicians to spend.

 

How does the tax work? The article explained: ?The Alaska tax is imposed on the net profit earned on each barrel of oil pumped from state-owned land, after deducting costs for production and transportation, which are currently estimated at just under $25 a barrel. The tax is set at its highest rate in Prudhoe Bay, where the state takes 25 percent of the net profit of a barrel when its price is at or below $52. The percentage then escalates as oil prices rise over that benchmark. Alaska gets about $49 of a $120 barrel, not counting other fees. ConocoPhillips said that in total, once royalty payments and other taxes are added in, the state captures about 75 percent of the value of a barrel. An accounting benefit eases the sting for oil companies. They get a huge deduction on their state taxes when calculating their federal taxes.?

 

But a tax deduction is not a tax credit, for example. The companies only recapture a portion of the state tax on their federal tax returns. And since taxes paid in other states also are deductible, Alaska?s tax burden is still massive.

 

What?s been the impact on the Alaska budget? ?Alaska collected an estimated $6 billion from the new tax during the fiscal year that ended June 30, according to the Alaska Oil and Gas Association. That helped push the state's total oil revenue ? from new and existing taxes, as well as royalties ? to more than $10 billion, double the amount received last year. While many other states are confronting big budget deficits because of the troubled economy, Alaska officials are in the enviable position of exploring new ways to spend the state's multibillion-dollar budget surplus. Some of that new cash will end up in the wallets of Alaska's residents. Palin's administration last week gained legislative approval for a special $1,200 payment to every Alaskan to help cope with gas prices, which are among the highest in the country. That check will come on top of the annual dividend of about $2,000 that each resident could receive this year from an oil-wealth savings account.?

 

Sounds great, right?

 

Well, as is always the case when taxes are increased, there are costs. It was reported: ?The industry, however, warns new taxes are already discouraging future exploration and development in newer, more expensive projects needed to boost waning production in Alaska's oil patches. ?Clearly, from the investor standpoint, Alaska has become a less attractive place to invest exploration and production dollars,? said Marilyn Crockett, executive director of the Alaska Oil and Gas Association.?

 

Is this just talk?

 

Consider the following: ?Still, oil-industry officials contend the tax already has affected investment decisions. BP Alaska, which runs Prudhoe Bay, said earlier this year that it had delayed the development in the western region of the North Slope as a result of the tax. ConocoPhillips cited the same reason for scrapping a $300 million refinery project. ?What the tax has done is take away all the upside,? said Doug Suttles, president of BP Alaska. The U.K.-based oil company paid more than $500 million in taxes to Alaska last quarter ? far more than it earned in profits from Alaskan oil, according to Suttles. Investment dollars are flowing instead to places that have a better return, like the massive deep-water projects offshore in the U.S. Gulf of Mexico, where ConocoPhillips said the government take equals less than 50 percent of the barrel. In July, BP announced it would begin developing the Liberty oil field, a $1.5 billion project expected to yield 100 million barrels of oil, located on federal lands in Alaska. If the project had been located in state lands on the North Slope, ?I don't think we'd have been able to make that investment,? Suttles said.?

 

Alaska politicians can try to justify this formidable tax in all kinds of ways, but the economic realities of high taxes on energy production cannot be wished away. It?s straightforward: Higher taxes on energy production serve as a restraint on and disincentive to energy production.

 

Federal elected officials, as well as state lawmakers in energy rich states like Alaska, should be focused on how they can remove governmental barriers to energy production, such as reducing tax and regulatory burdens. Federal and state taxes ? especially a tax as exorbitant as Alaska?s oil tax ? should be targeted for reduction.

 

The lesson from Alaska is not that the federal government can impose a windfall profits tax with impunity. Instead, the lesson is, like mom and dad said, when others do something stupid, don?t do the same thing.

 

Raymond J. Keating

Chief Economist

Small Business & Entrepreneurship Council

[timesjoke]

His mother is currently explaining to St. Peter how she is not at fault for raising a phuckin commie.

 

My mother just died and you have the balls to say something like this?

 

Be damn lucky you can hide behind your computer screen and spout crap like that you coward because if you ever grew a set enough to say that to my face we both know you would not be telling anymore lies ever again.

 

 

 

 

But there is the real point, hugo is really the socialist he tries to call other people. He wants the 'free money' to go to him, and not to those he looks down his nose at, but guess what, the law is the law and these people are earning money from the sale of their property, if hugo and the writer is too stupid to understand the difference between selling what you own and welfare.........well clearly they don't, that is why both hugo and the writer are not asking to end welfare.....

 

 

Instead they are asking for the welfare to be redirected into "THEIR" pockets.......

 

 

No, hugo is definately not a conservative minded person, he is really a socialist himself asking for handouts, and me exposing his true socialist self is why he feels he has to attack me in such nasty ways.

 

 

 

 

 

You feel like a big man now hugo?

 

Proud of your accomplishment to attack a man's dead mother?

 

Your a sick, twisted piece of garbage hugo, and one day you will eat a bullet out of your own gun because even you will come to understand just how worthless you are to humanity.

 

 

 

 

 

Anyway, the point is made where even the most stupid can understand that the funds each Alaskan earns from their share of sold property is only offsetting the taxes everyone pays into the Government in many, many ways.

 

Just buying every day items from a department story will have the average person paying a massive amount of Government taxes burried into the cost of the goods they purchase. Buying a hunting liscense, registering their car, almost everything we do involves people giving money to the Government.

 

 

But hugo wants to pretend like these forms of paying taxes is not really important and should not be considered in the discussion because it ruins his desire to redirect the welfare to other people instead of the people he is looking down his nose to.

 

But even the poor have the right to the law hugo.

 

Under the law they own property, the property they own is the oil. The funds they receive is from the sale of their property. If you want to steal away their property, then why not steal "YOUR" property? Property laws are at the heart of a capitalist system and if you are ready to erase a segment of our population's legal rights to property to give yourself more money in your pocket you did not earn, then your clearly embracing a socialist government......

 

 

Why?

 

 

Because we all know there is no such thing as a "pure" socialist system, men are still in the middle controlling things so there are still the advantaged few who think they are better than the rest. You can tell the way hugo talks of these poor people as if they are less than roaches, subhuman and not deserving of any respect and certainly have no right to possessions.

 

 

So hugo is one of those "elite" that deserve the 'free' money, but that is not welfare, that is just what the world owes him.........

[snafu]

Well hugo next time you get drunk and pass out we need to take all your money from you so you don't hurt yourself.

[hugo]

For an insensitive jackass he is sure sensitive, only to his own feelings. The only person I ever run across who makes veiled threats to kill people and pretends to be a decent human being.

 

Y'all keep defending Marxism. Collective ownership of resources is the very definition of Marxism. We got two socialist parties. Y'all prove it.

 

Y'all win, once debate sinks to this level I got better places to be.

[snafu]

Sarah Palin:

 

PPT (Petroleum Profits Tax) Under Murkowski:

 

PPT was the latest formula the state and oil companies used to calculate Alaskan’s share of oil revenues. The majority of the legislators wanted oil companies to share with the state 25 percent of the profit they made selling Alaska’s oil; others wanted the rate sky high: some wanted virtually nothing shared with the true resource owners. The debate was cut short when Murkowski unilaterally propose setting the lowest number seriously under consideration, a deal the oil companies liked very much.

 

Heading into the governship; I knew something needed to be done about it. PPT was generating far less revenue that legislators had advertised - 800 million less in the year or so since it passed. Also PPT called for the states share of oil revenues to be tallied as a percentage of the oil companies profits. Interestingly PPT passed; producers reported operating cost suddenly doubled. Beyond the numerical haze, the arrest and indtement of a half a dozen lawmakers involved in PPT’s passage created a cloud of suspicion that I believe would be dissipated only by a healthy blast of sunshine. ……….

 

After my astute team of experts put their heads together, we arrived at an entirely new way of calculating Alaska’s share of revenue derived from resource development: a hybrid system that included a minimum tax on gross receipts for North Slopes oil field, plus part of a net profits tax to encourage new development and reinvestment in existing infrastructures via incentives we provide entrepreneurs keen on new exploration. It allowed for tax credits on future work, restricted capitol expense audit and information- sharing provisions. The new formula would give incentives to the industry to produce more, while protecting the public……

The new formula is called ACES (Alaska’s Clear and Equitable Share)

 

In the special legislator’s 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 the 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 the sweet spot where industry and the public interest were mutually served.

[snafu]

I guess your idea of utopia would be total self preservation right? Biggest gun wins right hugo? How can you live in a society without some sort of socialism?

[hugo]

Private charity will take care of those who can't work.

[timesjoke]

I guess your idea of utopia would be total self preservation right? Biggest gun wins right hugo? How can you live in a society without some sort of socialism?

 

No, your completely missing the point, hugo wants welfare, but he wants it for himself.

 

 

Look at what the writer said, he wants the money to go to offset the taxes he pays, hugo says this is his idea of a great conservative so there you go.

 

 

 

Hugo and the writer both say it is fair to take the money and give it back to those who pay taxes, well I just pointed out that there are many ways each person pays taxes and the average alaskan is still paying in more money in taxes than they are getting back with these payments for sold oil so where is the problem?

 

 

For someone who loves to pretend to be so educated and talking down his nose at everyone, I wonder why hugo is incapable of understanding that point.

[hugo]

Y'all can use all the justifications you want to defend Marxism. Just know that is what you are doing. Ronald Reagan is puking in his grave that y'all call yourselves conservative.

 

The lunatic is on ignore.

[timesjoke]

Y'all can use all the justifications you want to defend Marxism. Just know that is what you are doing. Ronald Reagan is puking in his grave that y'all call yourselves conservative.

 

The lunatic is on ignore.

 

Well you can put me on ignore, but you can't change the fact that you supported welfare too, just to different people. The writer you called a great conservative said he wanted mnore of the funds to go to people who pay higher taxes,

 

 

Hugo......

 

You either "EARNED" the money or you did not.

 

If someone is getting money they did not "EARN" then it is welfare no matter how you try to play semantics with it. So you are not against welfare, you just want the welfare to go to "YOUR" kind of people who "DESERVE" to get money they did not actually "EARN".

 

 

Funny stuff, lol.

 

 

Now we see how independents like hugo justified voting for Obama.

[snafu]

Chenault wants to use permanent fund earnings for in-state gasline

 

 

 

Alaska Politics Blog : Chenault wants to use permanent fund earnings for in-state gasline | adn.com

 

Oh hell yea