Matt Mayer of conservative think tank Opportunity Ohio has released a paper disputing ten claims used to support Governor John Kasich’s push for a tax increase on the oil and gas industry. The paper was published August 23 on the Opportunity Ohio website.
Kasich, a Republican, spent much of the spring and summer promoting a plan to increase severance taxes on oil and natural gas “fracking,” with the revenue to be distributed as a statewide income tax cut. The governor’s plan – which his administration has marketed as a tax cut although it is revenue-neutral – was initially included in a mid-biennium review of the state budget before being removed by Republican legislators.
Kasich has claimed eastern Ohio landowners possess as much as $1 trillion in oil and gas in the Marcellus and Utica shale fields. Mayer cited a Cleveland Plain Dealer report that this figure is more than four times national production last year. Mayer also called attention to a geologist’s estimate that the governor is “probably wrong by a couple of zeros,” as previously reported by Media Trackers.
Mayer reported that Kasich’s proposal relies on other inaccurate estimates: early fracking operations in Ohio have produced much less than Kasich’s estimates while incurring capital costs much higher than Kasich’s estimates. As a result, Mayer calculated that Kasich’s severance tax increase would fund income tax cuts of less than $200 million through 2016 instead of the $900 million projected by the governor.
Mayer cited a recent Media Trackers analysis revealing that four of Ohio’s five public pension funds are heavily invested in energy companies identified by Governor Kasich as a target for higher taxes. Additionally, Mayer noted that a severance tax hike would be borne by some Ohio landowners and by the 2,250 small Ohio energy companies that make up the Ohio Oil & Gas Association.
Although the governor’s administration portrays opponents of the proposed severance tax hike as unprincipled “lobbyists,” Mayer reminded readers that conservative critics of Kasich’s plan include the National Taxpayers Union, Americans for Tax Reform, Americans for Prosperity Ohio, the Ohio Liberty Coalition, numerous local farm bureaus, and several local chambers of commerce.
Governor Kasich has promoted a severance tax hike as a common-sense measure to reduce the burden of the state income tax, but the Opportunity Ohio paper reported that Ohio has the nation’s sixth-highest local tax burden – compared to the 33rd-highest state income tax. Mayer reiterated support for cutting taxes, but emphasized the need for government spending cuts instead of targeted tax hikes.
“Equally important, we once again call on Governor Kasich to launch a state and local tax summit to develop a comprehensive tax plan that lowers the total state and local tax burden on all Ohioans,” Mayer concluded. “The continued shifting of tax burdens from the state to local governments or from one group and area of Ohio to other groups and areas of Ohio is nothing more than flawed redistributionist tax policy that hurts rather than helps Ohio’s competiveness and prosperity.”
To see Mayer’s complete arguments on all ten Kasich severance tax claims he disputes, download the Opportunity Ohio paper at OpportunityOhio.org.