Riley tries to raise taxes - again
Posted by BrianA leopard cannot change its spots. Bob Riley wants to raise taxes - again. This time he’s using a favored ploy of liberals by arguing that we should raise the taxes on businesses, or to be more specific a particular business in this case.
From CNN:
Gov. Bob Riley is trying to raise taxes on Exxon Mobil Corp. and other oil companies with natural gas wells along the Alabama coast, but his search for support in the Alabama House may produce a dry well.
House Majority Leader Ken Guin, D-Carbon Hill, said Wednesday he doesn’t believe the Republican governor will have much support when his tax increase bill comes up for consideration March 26 in the House Government Appropriations Committee.
…
Riley’s bill would change the state severance tax on natural gas wells from a value-based tax to a volume-based tax. State fiscal experts estimate it would raise the amount paid annually by oil companies for natural gas wells along the coast from $40 million to $80 million.
A sharp eyed reader pointed this out to me during the first week of this year’s session after reading my post on the tax plan when Folsom was advocating it. The bill, HR256 sponsored by Rep. John Knight, has the initials “EBO” in the header, which means that the Executive Budget Office birthed the bill. I didn’t have time to blog on the topic at the time and it fell off my radar.
In case the intro to this post wasn’t clear enough, my opinion on this tax increase hasn’t changed from what I said earlier. I think that it wreaks of retribution taxation and might not even be a sound long term tax plan.
Related content:
March 25th, 2008 at 9:44 am
It’s not a tax increase. It maintains the current revenue stream already in place, it just eliminates Exxon’s ability to pay no taxes at all by writing off their expenses, which is what a ruling from an Administrative Law Judge lets them do. They are able to write off all their “direct and indirect” expenses, which basically means they can deduct everything and get the amount they owe the state down to zero.
March 25th, 2008 at 10:08 am
To paraphrase what you just said…
A court of law has established the manner in which current tax law should be interpreted. Under the current law they can deduct enough expenses to get their tax liability down to zero. Bob Riley is proposing to “fix the glitch,” which would increase the tax liability of affected companies.
THAT IS A TAX INCREASE! How can the current revenue stream be maintained if, as you assert, these companies pay no taxes, but they will pay more under this law?
March 25th, 2008 at 2:57 pm
Changing the system from a value-based to a volume-based doesn’t raise taxes. The proposal keeps the same amount of revenue coming in and accounts for the $40 million Exxon is expected to declare as deductions so they don’t take our gas and pay us NOTHING for it.