Posted on 08/30/2008 9:10:30 PM PDT by RushingWater
Republicans in Congress this June united to defeat a proposed windfall tax on oil companies, deriding it as a bad idea that would discourage investment in U.S. oil exploration.
Things worked out far differently in the GOP stronghold of Alaska, a state whose economic fate is closely tied to the oil industry.
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.
(Excerpt) Read more at seattletimes.nwsource.com ...
You are confusing firm level decisions (micro economics) with government level decisions (macro economics). Firms should obviously be concerned with maximizing profits. I have never stated otherwise. The treatment of mineral rights is not a firm level decision. It is a government level decision. Governments encourage markets to promote efficient usage of resources. Maximizing tax revenue through public control of resources is the anti thesis of private property rights and markets. The State of Alaska is not a profit making enterprise. It is a government. Private enterprises are subject to market forces. Governments are not subject to market forces.
And yes this is another ad hominem directed at an idiot who claims he is given charge of teaching our youth how to think, because I am appalled at the drivel that runs off your lower lip.
You have repeatedly demonstrated poor argumentative skills with unfounded personal attacks. Perhaps you should understand the difference between micro and macro economics. Your problem most likely runs deeper. You associate me with a group that you do not like (leftist professors). Therefore, you will not think carefully about the arguments that I make. You replace careful thought with baseless personal attacks and insults.
No. All mineral right owners charge royalties for the production of their oil and natural gas. In this case, the mineral right owner is the state.
Legalized theft involves excessive taxation.
Can you point to the excessive taxation that occurs in Alaska versus other locations? The royalty rate of 12.5/16.67%, which is the only oil contribution to the Alaska Permanent Fund is hardly an excessive rate.
The lease rates are set by political fiat (a monopoly) rather than through the market.
Oil companies bid on leases around the world. The market does work if the rates are too high the oil companies spend their money elsewhere.
The Alaska law has a windfall profits tax element so I think that legalized theft applies somewhat to the Alaska law.
I think you are confusing separate issues. No tax element beyond the royalty rate goes to the Alaska Permanent Fund. The profits tax is collected only by the State government and is not part of the direct distribution to the public.
This law is a non resident taxing scheme because the purpose of the law is to provide tax revenues for the state of Alaska. In this situation, most tax revenues are provided as a negative tax (refundable credit) to residents. Individual residents are not owners of mineral rights. The state of Alaska controls the mineral rights. To be an owner, you need to make investment to buy property and then you have the right to sell the property. Alaska residents have not made any investment nor have the right to sell mineral rights.
Can you point to the excessive taxation that occurs in Alaska versus other locations? The royalty rate of 12.5/16.67%, which is the only oil contribution to the Alaska Permanent Fund is hardly an excessive rate.
Without the market setting the rates, the rates appear arbitrary. The rates are set by the only seller (state of Alaska) with little constraints on royalty rates. The royalty rates are not set in a negotiation process between a willing buyer and seller. The royalty rates had a large increase due to the 2006 law. I understand that the royalty money has tripled. I would say that is excessive taxation. Without a functioning market, I cannot say what the royalty rates should be.
I am mixing lease and royalty rates. The issue is the royalty rates that are set by the 2006 law. I am not sure if the state of Alaska also collects other leasing fees.
I think you are confusing separate issues. No tax element beyond the royalty rate goes to the Alaska Permanent Fund. The profits tax is collected only by the State government and is not part of the direct distribution to the public.
I am not concerned with the distribution of the taxation. I consider the royalties part of the taxation because mineral rights are controlled by the government. The Alaska law has a royalty rate or tax that applies when the price of oil climbs above $55 barrel. That provision seems like a windfall profits tax. I think that windfall profits taxes are excessive taxation, part of what I call legalized theft.
Why are royalties for the selling of mineral right a scheme in Alaska and normal business practice for the rest of the world, including when done by private ownership? The purpose of the royalty is to collect market value of a commodity being sold by the owner. In this case it is the State of Alaska selling the oil to which they own the rights.
Individual residents are not owners of mineral rights. The state of Alaska controls the mineral rights.
And the state government decided how to spend their collected royalties; they sent 25% to the residents. Would it be better if politicians spent 100% of the royalties?
Without the market setting the rates, the rates appear arbitrary.
The option to accept those royalty rates are made by the oil companies decision to invest with the purchase of the lease. This is not set in place after the oil companies are already producing. The oil companies make an economic decision to enter into this contract and what they are will to spend during the action of the leases. How is this not decided by the market? Rates were lowered during the industry downturn of the late 90's to attract more investment and raised when market conditions improved. But the rates are set for each lease at the time of sale. The changes in lease rates are only for new leases; the existing remain the original agreement.
royalty rates are not set in a negotiation process between a willing buyer and seller. The royalty rates had a large increase due to the 2006 law.
Wrong. The companies decide to buy the leases at the rates that have not changed. The raised royalty rates are only for new leases. Only the companies submitting and winning bids for new leases have these new rates.
I understand that the royalty money has tripled.
Perhaps you have noticed the price of oil has risen over time. The purpose of having a royalty rate rather than a fixed dollar amount is to receive fair market value the selling of the oil to the producing company. The royalty money paid in the late 1990's fell like rock with the falling oil prices as well.
The Alaska law has a royalty rate or tax that applies when the price of oil climbs above $55 barrel.
You are mixing up royalties and profit taxes. The Alaska Permanent Fund only collects a portion of the royalties.
There are lots and lots of government fees and taxes related to the production of petroleum around the world. But your complaint was with the contribution to the Alaskan Residents and they only receive 25% of the royalties and not the other taxes and fees. This rate is set when the oil companies bid on leases and does not change.
Stupid question.
How does a governor unilaterally raise taxes? Don’t they have a legislature in Alaska?
The governor did not nor cannot without the legislature.
You cannot collect market value without a market. The state of Alaska setting royalty rates is not a market. If you want market royalty rates, the mineral rights should auctioned to establish private property rights. I am surprised that you cannot see the difference between a market with many buyers and sellers and public control with one seller. I would prefer to have a single private enterprise control the mineral rights than a government. Governments are controlled by the political process often involving populism and income redistribution.
I am an owner of mineral rights in Texas. Companies can approach me to purchase my rights. If a company is unhappy with my price, the company can contact other owners. As an owner, I bear the risk of ownership. I made a very bad deal about 10 years ago on selling some mineral rights. The rights are worth much more now but I cannot sell them because of an existing lease.
I am equally critical of other governments that control the energy industry. Public control has led to under investment and low production in a number of countries have state control of the energy industry. The situation in Alaska is only partial control through mineral rights.
The option to accept those royalty rates are made by the oil companies decision to invest with the purchase of the lease. This is not set in place after the oil companies are already producing. The oil companies make an economic decision to enter into this contract and what they are will to spend during the action of the leases. How is this not decided by the market? Rates were lowered during the industry downturn of the late 90's to attract more investment and raised when market conditions improved. But the rates are set for each lease at the time of sale. The changes in lease rates are only for new leases; the existing remain the original agreement.
In a market, there is more than one seller. In Alaska, there is only one seller, the government. I agree that oil companies are not forced to buy the leases. The lease prices are not set by the market. I object to government setting lease rates. I want markets to determine prices. The State of Alaska may have mystic powers that allow it to determine the appropriate price. The history of governments setting prices is not encouraging.
And the state government decided how to spend their collected royalties; they sent 25% to the residents. Would it be better if politicians spent 100% of the royalties?
I am not concerned about the manner in which tax revenues are spent. This method sounds as good as any. I object to state control of proeprty rights. As a matter of policy, excessive tax revenue should be returned to tax payers.
Perhaps you have noticed the price of oil has risen over time. The purpose of having a royalty rate rather than a fixed dollar amount is to receive fair market value the selling of the oil to the producing company. The royalty money paid in the late 1990's fell like rock with the falling oil prices as well.
I believe in limited government. Government should grow with inflation and population. In Colorado, we have a taxpayer bill of rights with these principles although the rats are trying to undermine this part of the state constitution. You seem to favor more expansive government allowing faster growth than inflation and population. Financing government from a volatile industry has problems. Too much revenue in boom times and too little revenue in lean times. I do not think that government revenues should rise at the same rate as corporate profits. Too much revenue in good times leads to either large tax increases in bad times or Draconian cuts in government services.
Not true. The Federal government has sold leases, just not enough. Several different Native Corporations have sold leases.
You seem to favor more expansive government allowing faster growth than inflation and population.
Why do keep assigning a personal preference to me for correcting your mistakes about the existing situation in Alaska. I would prefer to see more private ownership in Alaska as I said before.
Financing government from a volatile industry has problems. Too much revenue in boom times and too little revenue in lean times.
Alaska has certainly experienced both and many in the government have tried to push for expanded areas of revenue. The problem is few exist in Alaska. They have resources to sell. Programs like the Permanent Fund try to balance out the boom and bust periods.
First, you clueless idiot, just because a government makes a decision does not mean it is automatically a macro economic decision, and most decisions made by most government agencies are micro not macro decisions. And you f'in well know that or you are incompetent.
Second you are bloviating out of multiple orifices at the same time. For instance this beauty "The treatment of mineral rights is not a firm level decision. It is a government level decision." You just got done telling us how the government has no business in this business, and should leave it to the firm level and now you are telling us it is a government decision.
And yes, until you start talking straight I am going to keep calling you a horses hind end, and I am quite deliberately using ad hominems because either you are a clueless incompetent idiot using big words that you hope to fool others with like the village idiot, or you are a fraud pushing another agenda.
And don't give me this intellectual arguement HS. You haven't made one. Maybe others are fooled by your attempts to put utter HS out there and call it an argument, but I for one am not.
Well I guess that government should dispense with collecting taxes because tax revenue goes up when times are good and down when times are bad.
Just another example of your utter cluelessnes. Your problem is clearly that you are attempting to replace ideology for having to think for a living.
Who else is supposed to exercise property rights for state owned property? Santa Claus?
When you advance a tightly reasoned argument, I will address it in kind. But when you attempt to flumox your interlocutors with ideology posed as fact and big words posed as theoretical argument, I will continue calling you a fraud and a horse's hindquarters.
You should be banned from this forum. Your comments are vile, foul mouthed, and devoid of any thought. You seem to have personality and communication problems. I will recommend banning you from this forum. You have repeated broken the rule about personal attacks and now you are using profanity. Pathetic argumentative skills.
Really, I thought I was quite clear. Your arguments are a fraudulent bunch of HS, and I know for a fact that you could not publish such drivel in a peer reviewed professional journal.
Exactly what happens to the private owners of leases?
Why can the private land owners not lease their mineral rights? The government is still in control; so how does that benefit anyone? They tell you how much you get or not get?
Jerry Brown agrees...I want some of that useful stuff...Please raise my taxes!
In Alaska, individuals never did own the mineral rights. After the federal government bought it from Russia, mineral rights were owned by the government, that is why they spent the money for the resources.
When it became a State, the state assigned land gave those mineral rights to the state. Any selling of state land keeps the mineral rights for that land. The view is the entire state and the people own those mineral rights. That is why a portion goes into the Alaska Permanent Fund and every Alaskan get a check each year.
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