Plain Dealer confirms: Kasich tax hike on frackers will be small
Yesterday, we looked at the rumor reported in Saturday’s Dispatch, that Governor Kasich was considering increases Ohio’s tax on oil and gas drilling and returning the revenue to Ohioans in the form of an income tax cut. With no figures available, we made some guesses that Ohio would raise its severance tax (the tax on extraction of gas and oil) to levels charged by Texas. We concluded that by increasing taxes on frackers, Kasich would generate enough revenue to give Ohio’s median earner a $108/year ($2 a day) tax cut.
Turns out we gave the Governor far too much credit for being willing to look his campaign cash gift horse in the mouth. Based on more information provided today by the Plain Dealer‘s Reggie Fields, it looks like the Kasich plan will generate in five years what we estimated the Texas tax rate could produce in just one.
The PD has the specifics, but Kasich’s plan would increase taxes on new wells targeting oil and natural gas liquids and actually decrease taxes on high-volume producers of natural gas. In total, Team Kasich says its plan would raise $666 million to $1 billion over five years. We estimated the Texas rate could generate $666 million in just one year. In other words, Kasich will come to the bargaining table proposing an effective combined tax rate just one-fifth of the level of Texas.
And, with the new revenue, the best Kasich could afford is an income tax cut for the median Ohio earner that’s somewhere between $21 and $32 a year.
Instead of funneling the estimated $666 million to $1 billion the state will receive over five years back into the budgets of local governments directly coping with the impacts of fracking – governments gravely impacted by cuts in state funding — he’s giving it back to taxpayers in a meaningless gesture to maintain his conservative “no net taxes” credentials with groups like Americans for Tax Reform.
It doesn’t sound like Speaker Batchelder or President Niehaus are too thrilled about the plan, based on Fields’ reporting. We’re not surprised. Oil and Gas industries are major donors to GOP campaign coffers. Do we really think they’re going to face off against friends like that just so they can give voters a thirty dollar tax cut? Even in an election year, it sounds far-fetched.