Calling for a “fair share” could be — and in Alaska usually is — a sign of political hypocrisy

This morning’s Alaska Dispatch News features another clever Opinion-Editorial by an Alaska lawyer (i.e. for more, see Ak-Headlamp analysis, column right.) who has become one of the largest individual contributors to democrat tax & spend candidates for the Alaska state legislature this election cycle.

Recently, in a Neil Cavuto interview, Las Vegas developer Steve Wynn provided an articulate response to the wealth distribution crowd (See video) using the term “fair share” to attract support for increased bureaucratic growth, higher taxes and a diminished of private sector.

The Wynn interview convincingly demonstrated that the free enterprise risk takers already pay the lion’s share of taxes while the lower quadrant of citizens pay no federal taxes.  While Wynn was addressing federal income tax issues, the Alaska oil tax principle is similar.

During the 1970s as the Prudhoe Bay field began production, the legislature increased oil taxes about a dozen times in as many years.

Sarah Palin - 5-11-09_IOGCC_BY_DAVE HARBOUR 121

Alaska’s former Governor Sarah Palin. Northern Gas Pipelines file photo by Dave Harbour

In 1981, Governor Jay Hammond and the state legislature created a more stable tax structure which produced investment climate stability for two decades — until Governor Sarah Palin changed then increased then retroactively transformed a stable, predictable, easily calculated, 15% severance tax into a complicated, progressive monster that decimated new oil investment for a decade.

When the largest Alaska population in Southcentral Alaska — by the mid-2000s — was scheduled to run out of natural gas before 2016*, Anchorage Mayor Dan Sullivan and his Energy Task Force recommended that the Legislature create tax incentives for new gas exploration.

The Legislature created tax incentives.  Oil & gas companies discovered new gas resources.

Then, two and a half years ago, due to the shale oil and gas explosion and OPEC decisions to flood the market with supply, Alaska’s oil revenue plunged.  Since Alaska was 90% dependent on oil revenue and that revenue stream declined by over half, the state began subsidizing its annual budget from savings accounts to the tune of about $3-4 billion/year.

Never mind that the legislature had, in its wisdom, let itself become 90% dependent on a volatile revenue source, those wanting to keep the monstrous government whole at the expense of the oil companies began screaming that oil investors should begin “paying their fair share”.

Adding insult to injury, the governor, a friend of the lawyer author of the column on the right, has vetoed payment of the tax credit incentives to the oil companies who at the state’s urging began exploring more for new gas and oil.  While the tax credit money may still be paid eventually, the governor and his allies are looking for ways to fill the deficit hole and the easiest way to do that seems to once again go back to the state’s largest investors with the smallest voting block.

And, to make it seem less like expropriation, the governor’s surrogates need to build a case.  The easiest case to build is always to claim with more emotionalism than rationale that, “those rich people are not paying their fair share.”

Well, without the oil companies paying virtually the entire cost of state government (i.e. up to 90%):

  • the largest commercial fishery in the world, off Alaska’s coast, would have to pay for the cost of its services
  • so would one of America’s largest, oil-subsidized tourist industries
  • so would profitable Alaska Native corporations
  • so would retail, transportation, construction, real estate, mining and other industries
  • Alaska’s university system would not exist without Prudhoe Bay investors and neither would Alaska’s huge medical infrastructure, and neither would a high-maintenance, gold-plated elementary and secondary infrastructure.
  • Alaska’s highest per capita non-profit organization population would mostly vanish without direct and indirect oil support.

{Yet, one seldom sees these beneficiaries of the risk taking private sector giving legislative testimony, delivering speeches or writing letters to the editor expressing appreciation for the risk taking investors.  Why?  Because, in our opinion, over the last four decades Alaska’s elected leaders have, on the one hand, demonized oil investors for not paying a “fair enough share”; and, on the other hand, defended the investors with their silence, too timid to stand up to the populist demonizing.}

We, therefore, agree with Wynn.  In the interview he called out the hypocrites using the “fair share” ploy to accumulate power and wealth for themselves.

Wynn also addressed the “paying your fair share” narrative and said 70% of the tax revenues paid to the U.S. government in income tax are paid by 5% of the citizens.

“When you hear a politician say ‘fair share’, you are talking about hypocritical political propaganda. You are not talking about an intelligent discussion of who is paying what and who isn’t paying taxes,” Wynn told host Neil Cavuto.

“People that create jobs, create tax payers, which benefits society as a whole,” Wynn said.  “I think our political dialogue in America is distorted and completely off track.”

*In addition to a predatory state tax policy, a misguided Regulatory Commission of Alaska Majority voted to reject a Marathon/Enstar Natural Gas supply agreement which would have required Marathon to produce an adequate gas supply at bargain, Henry Hub prices.  Instead, the agreement was denied.  Then, Marathon sold its concessions and left the state.  Alaska gas and electric consumer prices remained high even when Henry Hub prices sank with the new gas shale phenomenon.

This morning, Ak-Headlamp correctly opines:

Attorney and close ally of Gov. Walker, Robin Brena penned a follow-up piece to his recent commentary addressing some ADN responses to his original post. According to his article, “the purpose for this article is to reply to those responses so we may continue an important conversation for Alaskans’ futures.” Brena argues that Alaska is “not projected to get any net petroleum revenues after credits in 2017,” and continues to say that “Alaskans should receive one-third of the gross petroleum revenues being generated by the sale of our crude oil as our fair share.” Despite it all, Brena says that “of course” he is not against the oil and gas industry. Headlamp disagrees. Brena has spent his career litigating against the industry and is currently leading a group called “Together for Alaska” to attack any legislators who support the industry.

Arctic Iñupiat Offshore (AIO) has announced that it is joining the Arctic Coalition, a collection of 21 Alaskan and nationwide organizations that support responsible energy development in and off the coast of Alaska. AIO and the Arctic Energy Center (AEC), another Arctic Coalition member, also announced today the forthcoming launch of a multi-platform campaign – with a major television ad buy at its center – aimed at highlighting local North Slope communities’ perspectives on energy development in the Beaufort and Chukchi seas.

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