John Brummett's latest column offers a fairly good analysis of Gov. Beebe, namely that he's a pragmatist. His analysis of the
need to raise the severance tax is "comical", namely that it's "comically low".
On what basis? Is Tennessee's income tax "comically low" because of it's non-existent? What about all of that evil economic growth that's destroying the environment and infrastructure as a result of not having an income tax?
There's a drumbeat today to raise it on the notion that "they're going to drill anyway..." Really? Why weren't they drilling a few years ago? And why didn't we raise it a few years ago? The answer to the first question is because it's a business with very thin margins and it wasn't profitable based on market conditions. So when market conditions reach the point where it's profitable enough to do it, what's the state's response? Raise taxes and cut into the already thin margins? Why? Because somebody's making money and we're the government, so we get a piece of it. There's no compelling reason or
need for revenue. We're still experiencing a surplus. Which means the
only reason is to get a cut.
It isn't just reminiscent of mafia behavior...it is mafia behavior. These evil drillers are on the state's turf, so the state gets a cut.
What will the revenue be when the state drives the drillers out of the state? It will be less than it is now with "comically low" revenue because it will put thousands of people out of work, people who work in the industry, supporting industries, and in the areas benefitting from the economic growth caused by it.
"The practical problem is that our highway system needs work, but that, as gasoline prices rise and consumption lessens, we lose highway revenue because we rely on a per-gallon tax on gasoline, meaning consumption, rather than a tax elastic with price. "
My point exactly. Market conditions will also affect this tax, as when prices of natural gas fall and it is no longer profitable to drill here. Then the tax revenue will be "comically low", but it won't be funny ha ha. It will be funny sad.
We spend hundreds of millions of dollars of the taxpayers' money on attracting out of state businesses to come to Arkansas and then we punish those businesses that are already here... Does that make any sense? What's truly "comical" here is this newfound
need to raise a low tax which is helping to attract economic growth to the state. Mark my words, if they pass this tax increase, it will damage economic growth in the state. And no one will be safe. Wait till your industry is deemed to have a "comically low" tax and watch jobs and growth disappear.
Here's the
link to Brummett's column.
In a related story, Gov. Beebe has stated that he won't call a special session unless he is sure his tax increase will pass. Here's the
link.