Palin - Tax the Rich and re-Distribute

You Demmy's should LOVE this.....

Palin Boosted Oil-Company Taxes While Alaska Had Budget Surplus

By Alison Fitzgerald

Sept. 6 (Bloomberg) -- Alaska Governor Sarah Palin, who has joined the Republican national ticket as a tax-cutter, was a driving force in raising a tax on oil companies last year that will help swell the state's budget surplus.

The increase backed by the Republican vice presidential nominee will, at current prices, raise oil revenue to $11 billion this year -- almost twice what the state needs to fund its government -- state documents show. Alaska also has gotten more money from the federal government than its residents pay in taxes -- $1.75 per tax dollar in 2006, the most recent year available, according to the Tax Foundation, a Washington research group.

``Alaska is an outlier,'' Thomas Mann, a senior fellow at the Brookings Institution in Washington, said in an interview. ``They have traditionally used their fossil-fuel resources to generate some wealth for the citizens of the state.''

Republican presidential nominee John McCain, who last week chose Palin as his running mate, is campaigning as a tax-cutter and opposes raising taxes on oil companies because he says they discourage investment and cut production.

``There's never a good reason to raise taxes,'' said Grover Norquist, president of Americans for Tax Reform, a Washington group that encourages politicians to sign a no-new-taxes pledge. ``She does have a track record of cutting other taxes. We're interested in what she does going forward.''

Alaska has no state income, property or sales tax.

``It's like Dubai. It gets enormous royalties and taxes and fees of various types from oil,'' said Chris Edwards, an economist and state budget expert at the Cato Institute, a Washington group that advocates low taxes and small government.

Current Price

According to the state Legislative Finance Division, Alaska will get $11 billion in oil taxes and royalties -- $5 billion more than the $6 billion fiscal 2009 budget -- if prices average $106 a barrel, yesterday's price on the New York Mercantile Exchange. The state received $5.1 billion from oil companies in fiscal 2007, when it had a $1.2 billion surplus.

Each Alaska resident gets an annual rebate from state oil revenue, and this year Palin added $1,200 more to the $2,100 check each person received.

Palin, 44, proposed the tax increase Sept. 4, 2007, and called a special legislative session to pass it. At an Oct. 12 community meeting in Anchorage, the governor referred to oil as ``our very valuable non-renewable resource.''

``When we develop our natural resources, we will do so for the maximum benefit of Alaskans,'' she said then. Palin signed the tax increase Dec. 19.

Obama's Proposal

Edwards said Palin's oil tax is similar to the windfall profits tax proposed by Democratic presidential nominee Barack Obama. McCain, 72, has criticized Obama's plan.

McCain economic adviser Doug Holtz-Eakin, in an interview, called Palin's oil tax progressive, not a windfall tax. ``It doesn't divide profits into windfall and other profits,'' he said.

Under Palin's plan, called ``Alaska's Clear and Equitable Share,'' oil company profits are taxed at a 25 percent base rate, up from the previous 22.5 percent. When the price rises to $30 over cost, or about $52 a barrel, the tax rate rises 0.2 percent for each dollar.

Oil companies weren't happy with the plan when it passed.

``This massive tax increase will weaken investment in Alaska's oilfields at the very time that more investment is needed,'' Doug Suttles, president of BP Exploration Alaska Inc., said in a Dec. 27 e-mailed statement. ``We will now review all our planned activities.''

BP Plc's Alaska spokesman declined to comment this week on the Alaska tax.

`Reduces Production'

Taxing oil profits ``always reduces production,'' Edwards said. ``If you're ExxonMobil, you've got dozens of projects in hundreds of jurisdictions all over the world. A change in taxes at the margin and suddenly the new investment in Canada will look better than the one in Alaska.''

Palin is using some of the surplus to boost state savings. She is paying into Alaska's teacher retirement fund early and created a Public Education Fund that will hold enough money to pay for the state's schools for at least a year, according to state budget documents.

Palin, in her vice-presidential acceptance speech Sept. 3, touted her fiscal credentials by saying she trimmed a half- billion dollars from the state budget. She used a line-item veto to cut hundreds of grants, including $300,000 for a Catholic Community Services family counseling and adoption program, $6,200 to repair the sidewalk in front of an Anchorage elementary school and $6 million to replace an aging Anchorage fire station.

`Hockey Mom'

Palin, a self-proclaimed ``hockey mom,'' also cut funding for a local hockey association to buy a blade sharpener for its Zamboni machine.

The cuts angered some lawmakers.

``That's probably my only disagreement, making cuts when we had a surplus,'' Republican state Representative Kevin Meyer said in a telephone interview.

While she cut the capital budget, Alaska's operating budget rose. Most of the additional spending went into the teacher retirement fund, sending rebates to citizens and creating a fuel- cost fund for state agencies, David Teal, director of Alaska's Legislative Finance Division, said in an interview.