It doesn’t make sense to me.
The rationale (as I understand it) is that the people of Alaska own the resources and therefore the extraction companies owe them a royalty on those resources upon extraction.
But this doesn’t make sense to me, because when the resources are gone, what do future Alaskans own? Why do people own the resources just because they happen to live in that State precisely now as a point in time? Who owned the resources before? The Inuit?
If anything, the taxes collected should be put in a ‘lockbox’ for future generations ... but even that is supect.
The royalty payment was not change by Sarah Palin. A royalty payment goes into the Permanent Fund that is saved for future generations. About 1/2 the earnings of the fund, including the royalty payment is shared with the Alaskan people based upon a 5 year average. Most of the money in the check comes from performance on the investments, about 1/5 is from the royalty income.
This process by keeping half of the earnings and returning to the fund allows it to grow for future generations.
ACES, the taxing policy implemented under Sarah Palin’s direction is a tax on profits. Expenses including the royalty payments are deducted then the remained taxed. This rate increases as the profit increases. This money does not go to the fund but goes directly into the State Treasury for government spending.
Many outside people confuse the royalties and taxes.
Governor Palin’s key legislative victory, Alaska’s Clear and Equitable Share (ACES) , has been a transparent, constitutionally-based, pro-growth success. In 2007, Governor Palin signed into law ACES, an oil tax structure that includes incentives for development and investment in capital improvements and ensured that Alaska’s resources would be developed for the maximum benefit for the people of Alaska as per their state constitution. The Alaska constitution states that the state’s natural resources belong to the people of Alaska."
-"If anything, the taxes collected should be put in a ‘lockbox’ for future generations ... but even that is supect.
ACES has been a success for both the people of Alaska and the oil companies. In a recent Facebook post, Governor Palin highlighted how the revenues of ACES have benefited the people of the Alaska and have made the state financially sound, as it has helped provide a $12 billion state surplus, put billions is savings, pay down underfunded state pension plans, and forward fund education. ACES has proven to be a success for oil companies as well. ACES has contributed to oil job increases, high profits for industry, a record high numbers of oil companies drilling in Alaska, and increased capital development by oil companies spurred by $3 billion of tax incentives. Alaska now has the second best business tax climate in the country, moving up two spots since the passage of ACES.
All good points. You're completely right from a pure, consistent, free-market perspective. But in the case of Alaska, I believe it's the state constitution which declares that the natural resources belong to "the people." Should Palin have disregarded the constitution of her own state?
While I agree with your premise that some should be set aside, keep in mind that if Alaska was split down the middle, Texas would be the third largest state. There are tremendous resources there yet to be discovered.
>> “If anything, the taxes collected should be put in a ‘lockbox’ for future generations” <<
.
Lockbox? - Isn’t that one of Algore’s campaign words?
How much is in his Social Security ‘lockbox’ now?
Yep, and the same amount would be in Alaska’s lockbox too.
Which is precisely the proposition on which all extraction industries operate.
The owners of the land own the resource. The oil (or mining) company pays to obtain a lease to develop the property. And the lease specifies a royalty rate that the extractor will pay to the owner if it is brought into production.
Most of Alaska is public land. Therefore, the owners of the land are the Alaskan people. In this case, the state government is serving as agent for the Alaskan people.
Strictly standard operating procedure.
And, like all extraction industries, when the oil is gone, the owners still own the land.