Here's your 7 cents. Thanks for investing OP-EDBy Dan Fagan
The Alaska Standard You hear it from the business community over and over again. Alaska is closed for business. There are a number of international firms that confirm this. Since ACES and AGIA passed, Alaska has been rated near last or dead last when it comes to places to invest new capital.
One of the real culprits in this anti-development mode Alaska now finds itself in is the progressivity rate found in the tax regime ACES.
Once Democrat and ultra left-winger Sen. Hollis French took over the construction of the progressivity rate in ACES, it caused the tax structure to be the most anti development piece of legislation in the history of Alaska.
But you can't blame it all on French. After he turned ACES into a giant windfall profits tax, half term Governor Sarah Palin called it a better bill and acting Governor Sean Parnell has been praising the giant, job killing tax ever since.
Why is ACES so destructive? Here's one example. When the price of oil jumps from $50 a barrel to $70, the tax increases 181 percent. The progressivity rate is designed to take the upside out of investing for the industry.
Another example. If the price of oil jumps from $70 to $80, the producers don't make any extra money. The progressivity tax eats up all the oil companies new profits brought by the $10 increase in the barrel of oil.
And if the price of oil rises back to $120 a barrel producers will be taxed at astonishing rate of 93 percent. That's right, for every new dollar the producers invest in exploration and development with the hope the price of oil going up, they get to keep as little as 7 cents on their investment dollar at higher prices. Hugo Chavez has nothing on Hollis French, Sarah Palin, or Sean Parnell.
To see a much more detailed look at the horrid tax regime Aces, click here.
Posted: September 13, 2010
More Latest News »