George Kaiser Speaks Up On State Revenue Shortfall

[Conan71]

A very well reasoned Op-Ed piece.  I don't believe the author needs any introduction here:

http://www.tulsaworld.com/opinion/readersforum/george-kaiser-eight-myths-in-service-of-an-ideology/article_ab7b8105-d58b-5cb5-9dc2-e355269bd85d.html

Like many Oklahomans, I am deeply disturbed about the deterioration of our state over the past five years, while our leaders looked away. I have lived here for more than two-thirds of the life of the state, and I have never seen the situation so desperate or the governmental response to the plight of our people so dismissive.

In terms of quality of life and core government services, we are truly in a race to the bottom. As an oilman and banker, I know that we cannot attract talent nor retain our bright high school and college graduates nor generate any true economic development with poor schools, healthcare, public safety and infrastructure. We are seeing an evacuation of our best and brightest, and not just teachers. Our greatest job growth is in low wage call/fulfillment centers. This is a self-inflicted wound — the direct result of an extreme application of the discredited economic theory that tax reductions stimulate economic activity, the so-called Laffer (should be Laugher) Curve.

Most of us will acknowledge that the state is in a fiscal meltdown. We have long ago cast off the frills and fat and are now deep into the muscle. How did we get to this point and how can we turn the vicious cycle into a virtuous one? It starts by understanding and rejecting the eight myths upon which the prevailing policies are based:

• Myth No. 1: Oklahoma is a high tax state.

We are in the middle among states in income and yet 48th — probably 50th now — in state and local revenues. Not surprisingly, we are also near the bottom with respect to most measures of quality of life and core government services.

• Myth No. 2: Low taxes generate economic development and prosperity.

In fact, the lowest tax states, relative to income, are the poorest and have the weakest economic growth while the highest tax states have the strongest economic growth rates, though one could debate cause and effect.

• Myth No. 3: Our budget can be balanced by eliminating waste.

We should always seek efficiencies and root out corruption, but we are now well below a spending level that any other state has found can support basic services.

• Myth No. 4: Our budget collapse resulted from the decline in energy prices.

The cumulative decline in inflation-adjusted expenditures exceeds $2 billion per year; energy pricing accounts for about $300 million or 15 percent, tax cuts granted to the oil industry account for well over $500 million or 25 percent and income tax cuts about $1 billion per year or 50 percent.

• Myth No. 5: If we restore energy taxes to historic levels, companies will move their drilling to lower tax states.

There are virtually no lower tax states! All of the other major oil-producing states charge 6 percent to 13 percent. Restoring the new well gross production tax from 2 percent to Oklahoma's previous level of 7 percent would reduce a well's revenue by only about 2 percent to 3 percent, not enough to affect any drilling decision, since pre-drilling estimates of reserves, costs and prices can each vary by more than 50 percent. We drill where God put the hydrocarbons, not where the tax rate is lowest.

• Myth No. 6: The energy industry already pays more than its fair share of taxes.

Active Oklahoma drillers pay virtually no income tax and about a 3 percent gross production tax, less than 4 percent of the state's budget. The higher industry-quoted number includes employee income and sales taxes and even state royalties.

• Myth No. 7: The low gross production tax rate benefits Oklahoma royalty owners and producers.

More than 70 percent of the benefit goes to out-of-state shareholders of publicly held companies at the expense of Oklahoma taxpayers.

• Myth No. 8: The Legislature is united in support of the low tax ideology.

The general public knows that we need to save our schools, hospitals and roads, stem the outmigration of our kids and attract businesses looking for a place that is safe and invests in education and infrastructure. Freshman and female legislators and a majority of the rank and file understand that. Our legislative leadership should listen to the wisdom of the people of Oklahoma.

We have drained our fiscal lifeblood, and the ideologues are prescribing more leeches. It's long past time to stop the bleeding and start the transfusions. It doesn't require smarts, just statesmanship. We must acknowledge our recent fiscal folly and restore some of the revenues we cut ... from where we cut them. We need a sustainable plan that brings teacher salaries and educational funding up to competitive levels and begins to restore our roads, police and safety net.

We should balance the budget without gimmicks and gradually restore the drastic cuts we have made. We should continue to seek efficiencies and hope to benefit from an energy recovery. But the starting point is to undo some of the $2 billion of tax cuts and subsidies that we doled out. Since $1 billion of that came from income tax cuts, which are a (misplaced) article of faith in the Legislature, we will have to look instead at the subsidies we handed out to select industries and bring our excise tax rates closer to other states. And, we should require internet sellers to remit the same taxes that our local shopkeepers collect, to eliminate their current 8 percent to 10 percent disadvantage.

Everyone has to accept his share of the burden. If we restore the gross production tax to the rate set in 1971, remove exemptions that wind energy no longer needs, raise the tobacco tax by $1.50 (securing public health benefits), bring our fuel taxes up slightly from 50th among the states and adopt the internet tax legislation that other states have passed, we can more than offset our current year $878 million deficit, make a substantial down payment on a teacher pay raise and reverse a few of last year's most punitive spending cuts.

It's not hard; it just takes a little political courage. And it is the best path to improving our quality of life, reversing the brain drain and stimulating economic development.

George Kaiser is founder of the George Kaiser Family Foundation.

[cannon_fodder]

+1

[heironymouspasparagus]

Better late than never, I guess....



Warren Buffet and Bill Gates have been saying similar things about Federal tax issues for many years!  Many similarities.

[BKDotCom]

I like his points 5 & 6.

I saw my first "windfall coalition" commercial Sat night while watching Saturday Night Live.
The ad featured Frank Keating saying that tax subsidies for wind farms are the reason for our budget shortfall and the reason we can't fund education.   
The "windfall coalition" is (not surprisingly lead by Harold Hamm and the Oil/Gasi industry)

Just how stupid do they think they are?  How stupid do they want us to be?   Good luck filling any positions with the what our gutted education system is producing.
Or, like The Kaiser says, our graduates get the heck out of Dodge.

• http://okpolicy.org/oklahomas-wind-subsidies-dwarfed-subsidies-oil-gas-industry/
• https://www.thelostogle.com/2017/04/25/barry-switzer-is-a-sellout/

[heironymouspasparagus]

Just how stupid do they think they are?  How stupid do they want us to be?   Good luck filling any positions with the what our gutted education system is producing.
Or, like The Kaiser says, our graduates get the heck out of Dodge.

Rhetorical question, I am sure...   They know EXACTLY how stupid we are - we keep electing them!  That is their feedback to prove the dumbing down is working.


There was another special election in Seminole county last week.  The RWRE candidate won it.  But only by about 52 votes, out of about 2,400 cast.  Out of a potential voting population of probably close to 20,000!   That right there shows it.

[AquaMan]

They're all good but I liked #4. Too many people think its the decline in oil prices rather than the fact they only pay 3% gross production tax while others states are at 7%.

Kaiser is the kind of governor we need right now. He is what a real businessman looks, sounds and acts like.

[BKDotCom]

Rhetorical question, I am sure...   They know EXACTLY how stupid we are - we keep electing them!  That is their feedback to prove the dumbing down is working.

We elected the oil and gas industry?
We just keep electing the politicians who get their pocketbooks filled by oil & gas (oligarchy)

[swake]

We elected the oil and gas industry?
We just keep electing the politicians who get their pocketbooks filled by oil & gas (oligarchy)

Oligarchy or Kleptocracy?

[heironymouspasparagus]

We elected the oil and gas industry?
We just keep electing the politicians who get their pocketbooks filled by oil & gas (oligarchy)

We "elect" Failin' and the Clown Show.  Over and over again.  Who are bought and paid for by the oligarchs, like Keating, Bartlett, Pickens, et al.  So, yes, we elected the oil and gas industry.  As Inhofe brags about at every opportunity - they bought him decades ago and he says they need to give more!

What has kept Kaiser on the sidelines with this for so long?  I think it is great that he wrote that - I like the guy a lot from what I see him doing for the city/state.  But he is years behind the curve on this topic.  Sadly.

[heironymouspasparagus]

Oligarchy or Kleptocracy?

Yes!  We will take both, please!
    --Voters of Oklahoma.

[heironymouspasparagus]

The richest among us up to this point on the gutting/raping/pillaging of Oklahoma....  Maybe it will change now... Lol !


https://www.youtube.com/watch?v=u9Dg-g7t2l4

[sgrizzle]

The richest among us up to this point on the gutting/raping/pillaging of Oklahoma....  Maybe it will change now... Lol !


https://www.youtube.com/watch?v=u9Dg-g7t2l4

I can't stand that version. Like the band, like the song, the two together is nails on a chalkboard.

[sgrizzle]

I agree with Kaiser's writeup and want to thank him for doing that. From what I read about him, there was probably days of research he spent to distill down the important facts like that, and I have trouble disagreeing with any of his suggestions.

[heironymouspasparagus]

I can't stand that version. Like the band, like the song, the two together is nails on a chalkboard.

Really???   I like it about as good as the original !!  Must be those younger ears you are listening through - the higher frequencies may be playing hell with your enjoyment of it.

Do you like the "Greatest Hit of Disturbed" any better??  I like it, too...

https://www.youtube.com/watch?v=66gSvNeqevg


Edit;  I think Draiman missed a great opportunity there to do that himself!!

[heironymouspasparagus]

And I just got to see the latest in d-baggery from the people attacking wind power.  They have dragged out Barry Switzer from under his rock to tell us just how bad wind power is for our kids - lying (of course) that the few millions going to wind power, which have already much more than offset the costs, are causing the big deficits we see today.

Sounds about right for Barry...the guy that brought us school sponsored, institutionalized assault, burglary, and cocaine culture to the hallowed halls of Owen Field.  You're doing fine, Oklahoma!!