When Alaska Gov. Sarah Palin had to find money for her state, where did she turn?
To the oil companies. But not the way you might expect.
According to Kevin Drum in his blog for Mother Jones magazine, as part of a tax reform measure last year, Palin raised taxes on the oil industry upon which Alaska, a state with no income or sales tax, relies.
Yep, a Republican tax raiser. And one who put the tax increase squarely on big business, one of the party's traditional constituencies.
But I'm sure John McCain knew that when he selected her as his vice president.
The tax price of oil: Palin's three-part plan calls for:
- An increase in the basic tax rate on oil company profits from
22.5 percentto 25 percent.
- A windfall profits provision. When oil prices went over $50 per barrel or so, the tax rate would rise
0.2 percentfor each dollar.
- A tax floor. If oil prices fell below about $40 per barrel, oil companies would still have to pay 10% of the gross price of the crude they produce.
Tax hot potato, potahto: Palin was especially dedicated to the windfall profits provision, writes Drum, only she called it "progressiveness."
Hmmm. I don't recall the GOP using that term when some Democrats on Capitol Hill wanted to talk about a federal windfall profits tax on the oil industry.
In fact, in today's New York Times, Republican stalwart Ben Stein takes issue with, in his words, Barack Obama’s Questionable Stimulus Plan.
One of the problems that Stein sees in the Democratic presidential candidate's proposal is the suggestion that another round of rebates be paid for by imposing a surtax on oil companies.
Stein pretty much encapsulates the basic outside-of-Alaska position against oil company windfall profits taxation:
But why punish successful oil companies with a surtax at all? After all, when did profits become a dirty word? And why does Senator Obama think oil companies make excessive profits?
I would argue that over the long term, oil companies’ profits relative to sales are not above average for industrial or financial companies. But even if they were, why punish the owners of the oil companies, who are largely pension plans, group or individual, and individual investors? Why should we punish some American firefighters who own oil company stocks more than American firefighters who own drug company stocks or tobacco stocks? Why tax away the savings of some Americans because they happen to own a share in a company that supplies a totally legal, absolutely indispensable product like oil? I don’t get that at all.
Maybe Stein can put in a call to McCain and Palin and see if they can help him understand the semantics -- progressive vs. dirty -- of her oil industry windfall profits tax.
Size matters: The amount of the tax also is sure to raise some questions and eyebrows.
Now I know Alaska is big (until global warming melts most of it and Texas reclaims its rightful spot as the largest state) and Alaskans, like Texans, are partial to grand gestures. But it also seems like Palin might have gone a bit overboard with this particular tax.
Drum says that the governor's new tax system represents a
Again, you gotta wonder how a
It definitely will be interesting to see how McCain and staff will spin this bit of information about his vice president pick.
Offshore Alaska rig photo courtesy of Minerals Management Service.