The Oil Drill
Posted by: Chuck DeVore | 03/12/2008 3:56 PM
Stand by for a dose of bad political theater today in Sacramento as the Democrats vote to increase what is already the nation's highest gas tax by another $1.2 billion dollars. But it's OK, as it's "for the children." As far as political drills go, this one is pretty spectacular. By law, preliminary school layoff notices have to go out over the weekend, so, the Democrats scheduled this vote to raise taxes on the oil industry to spend more on government education for the eve of the layoff notices.
The Democrats' proposal would levy a 6 percent tax on all oil produced within the state and impose a 2 percent tax on oil industry profits - none of which is supposed to be passed on to the consumer (a near impossible task). California produces 40 percent of its own oil and most of its own refined product (gas and diesel) and even refines almost 100 percent of Nevada's fuel and about 60 percent of Arizona's fuel. So, a 6 percent tax on California oil will mean that foreign oil, crude from places like Iran and Venezuela, will instantly have a 6 percent cost advantage on California oil (the U.S. Constitution prohibits California from taxing imports). With foreign oil cheaper relative to Californian oil, Californians will buy more overseas oil, rendering us more dependent on foreign oil at a time when we should be becoming more independent of foreign oil while at the same time devastating California's domestic oil production.
The bill AB 9xxx passed out of the Assembly Committee on Revenue and Taxation today on a 6-3 party line vote. The full Assembly will take up the measure at 4 PM today.
After we get back from Easter break, I suspect the Democratic leadership will propose a new tax drill every week: higher taxes on alcohol, tobacco, a bigger income tax on our most productive citizens (never mind that California already has the highest marginal income tax rate in the nation), a split roll tax on business property, etc. etc.
Lost in the debate is the fact that we increased state spending about 44 percent in only four years. We have a spending problem, not a tax revenue problem.
All the best,
Chuck DeVore
State Assemblyman, 70th District
www.ChuckDeVore.com
The Democrats' proposal would levy a 6 percent tax on all oil produced within the state and impose a 2 percent tax on oil industry profits - none of which is supposed to be passed on to the consumer (a near impossible task). California produces 40 percent of its own oil and most of its own refined product (gas and diesel) and even refines almost 100 percent of Nevada's fuel and about 60 percent of Arizona's fuel. So, a 6 percent tax on California oil will mean that foreign oil, crude from places like Iran and Venezuela, will instantly have a 6 percent cost advantage on California oil (the U.S. Constitution prohibits California from taxing imports). With foreign oil cheaper relative to Californian oil, Californians will buy more overseas oil, rendering us more dependent on foreign oil at a time when we should be becoming more independent of foreign oil while at the same time devastating California's domestic oil production.
The bill AB 9xxx passed out of the Assembly Committee on Revenue and Taxation today on a 6-3 party line vote. The full Assembly will take up the measure at 4 PM today.
After we get back from Easter break, I suspect the Democratic leadership will propose a new tax drill every week: higher taxes on alcohol, tobacco, a bigger income tax on our most productive citizens (never mind that California already has the highest marginal income tax rate in the nation), a split roll tax on business property, etc. etc.
Lost in the debate is the fact that we increased state spending about 44 percent in only four years. We have a spending problem, not a tax revenue problem.
All the best,
Chuck DeVore
State Assemblyman, 70th District
www.ChuckDeVore.com
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Thank you for keeping us informed. This bill is but the first of many that must be stopped.
THANK YOU!
Dang this is frustrating.
Adam Smith devoted a significant section of "Wealth of Nations" to explaining why these kinds of extraction taxes are a REALLY BAD IDEA (tm).
However, the folks behind this clearly don't care about good economic policy, so perhaps another irony would be more persuasive.
Transport costs are less than the amount of tax, so the the net effect of this bill will be to bring petroleum to California consumers from further away, meaning a net increase in CO2 emissions. Nice move, dolts. I you want, I can gin up some crude estimates of the additional tons of CO2 this bill will cause to be released to the atmosphere.