Is what you're really saying that instead of basing the State's leasing charge to oil companies (I think that's what you're calling a "windfall profits tax") on the unit of oil produced, the leasing charge is based on the going price of the unit of oil produced?
And IF that is so, if the going price of oil was at a low and the unit charge was fixed at a price that made its production too costly, wouldn't the oil companies be a whole lot less incentivized to increase production? And if the unit charge was fixed at a price extremely low compared to the going price of oil, while the companies would have incentive to produce more oil, would that be an extraordinarly stupid business move on the part of the owners of the land being leased? Wouldn't that be a pretty dumb exective decision for someone watching out for the state's self interests?
In other states, lease income derived from activities on state-owned land goes right back into government bureacracy. If I correctly understood the material I spent hours reading after googling the issue online (which, again, I urge FReepers and lurkers to do as well, because this serious charge against Palin is worth investigating) the leasing negotiation change that Palin made ended up putting more than $1000 MORE on top of the $1200 already being paid in dividends to individual citizens in Alaska that year (I think it was 2007) to spend, invest, or save as they please. HOW exactly was that a negative impact to business?
From the OLR Group... ALASKA OIL AND GAS PRODUCTION TAX
Alaska's oil and gas production tax (Alas. Stat. Sec. 44. 55. 011) applies a percentage tax rate on the net value of oil and natural gas produced in the state. In the case of oil, the net value is the market value of the oil that is shipped to the West Coast, after deducting the producer's production costs (currently about $ 25 a barrel). The law provides for transferable credits against the tax for various expenditures, including oil and gas exploration investments and contributions to higher education institutions in the state. This tax is in addition to royalties paid to the state from production on state land and income and property taxes.
There is a minimum tax based on the gross value of oil produced from the state's North Slope. The minimum is 4% of the gross value so long as the average price of oil on the West Coast is at least $ 25 per barrel (the percentage decreases if the price falls below this level).
There are separate tax rates for (1) oil and gas produced from the fields around the Cook Inlet in southern Alaska and (2) oil and gas produced from property that constitutes a landowner's royalty interest.
In 2007, HB 2001 increased the base tax rate from 22. 5% to 25. 0% of the net value of the oil or gas. The legislation modifies a feature of the tax under which the tax rate increases once the market price reaches a specified level. Under the act, if the net value of oil or gas is less than $ 92. 50 per barrel of oil equivalent, it is subject to a tax of 25% of the net value plus 0. 4% times the difference between the net value and $ 30. Thus, if the net value was $ 80 per barrel equivalent, the tax would be $ 20. 20 (25% times $ 80, plus 0. 4% times $ 50). The rate of the added tax falls to 0. 1% times the difference between the net value and $ 30 if the net value exceeds $ 92. 50.
The act has many other provisions. These include (1) increasing credit for exploration expenditures, (2) making certain expenditures, such as those associated with cleaning up spills, ineligible for the credits; (3) establishing a state fund for purchasing the credits.
Now let me repeat the key aspect of point... and please.....repeat please tell me how this is not a windfall profits tax?
In 2007, HB 2001 increased the base tax rate from 22. 5% to 25. 0% of the net value of the oil or gas. The legislation modifies a feature of the tax under which the tax rate increases once the market price reaches a specified level. Under the act, if the net value of oil or gas is less than $ 92. 50 per barrel of oil equivalent, it is subject to a tax of 25% of the net value plus 0. 4% times the difference between the net value and $ 30. Thus, if the net value was $ 80 per barrel equivalent, the tax would be $ 20. 20 (25% times $ 80, plus 0. 4% times $ 50). The rate of the added tax falls to 0. 1% times the difference between the net value and $ 30 if the net value exceeds $ 92. 50.
Nice spin trying to rationalize the amount of extra money for lease holders and not state the increase tax revenues that the Alaska realized. Sounds like a democratic party talking point. Tell the whole story.... how much did this tax increase add to the Alaskan government coffers?
Secondly, which is really jaw dropping you state "How is this a negative impact to business". Any time (extra) money changes hands from business to a government is a negative impact.
"A windfall profits tax is defined as a higher tax rate on profits that ensue from a sudden windfall gain to a particular company or industry."
Since the amount collected by the state of Alaska is tied to the price of oil, hence profit (i.e price of oil tends to increase the profit margin)(see earlier note)Explain to me, how this is not a windfall profit tax.
No one will doubt that Sarah is generally pro business, but for someone like me who works in the oil industry, how do I know she won't pull the same stunt as president.
Again a little hint for those who may question my motive for not wanting to support this woman.