Governor Talks Taxes, Oil and Gas Industry Pushes Back

Governor John Kasich is talking about cutting taxes.  Governor John Kasich is also talking about raising taxes.

The Kasich administration is discussing an across-the-board income tax cut as part of its negotiations with the oil and gas industry to revise the state's severance tax to include natural gas liquids, according to an article in The Columbus Dispatch.  What this will mean in the end to Ohio residents is still unknown at this point.  The final results will be connected to the outcome of the ongoing negotiating.  The income tax cut could be facilitated further by raising the severance tax, in addition to extending it to include natural gas liquids.

While this may seem like music to the ears of the average Ohio taxpayer, oil and gas executives aren't ready to give in to increased severance taxes just yet.  "We applaud the idea of reducing the state income tax," says Tom Stewart, executive vice president of the Ohio Oil and Gas Association.  "We question whether one industry should be asked to pick up the slack."  More after the jump...
Jerry James, president of the Oil and Gas Association and president of Artex Oil Co. in Marietta, went a step further in pointing to the potential negative economic impact of raising taxes on the oil and gas industry.  "There's an old adage in life:  If you want less of something, then you tax it."

This reflects the stance oil and gas producers have taken.  Leaders in the industry point to the personal income tax, sales tax, commercial activities tax, and the severance tax and say that between those four taxes they are already carrying enough of a burden.  They also point to economic forecasts which say that Ohio can expect a significant increase in tax receipts even with no change in the tax laws.

Kasich, though, has two previous statements that he must endeavor to follow through on.  He has long said that he would not seek taxes that would discourage further growth in the shale-drilling industry.  However, he also discussed and campaigned on tax cuts for even longer, and it's something that he has not yet been able to deliver on.

The oil and gas industry warn that further taxation will discourage more development and thus not achieve the desired results.

However, other states have made similar tax arrangements, and it does not seem to have impacted oil and gas development in any significant way.  What do you think?  Should Kasich hesitate because of the oil and gas industry's statements, or are they just posturing?  Is raising taxes on the industry too risky, even if it enable a cut on the income tax, or do you think that the money the oil and gas industry can make off of shale-drilling is too big of a lure for them to let a little bit of extra tax keep them away?  Comment here or at the Daily Digger Forum!

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