SPECIAL BONUS EDITION!!!
Back from Anchorage – with questions

Playing hooky

I’d had enough of the legislature for a while. Either it was getting crazy or I was. So I snuck out of town Friday night and flew home to see the woman who lets me live with her.

Had a great time. Held hands with my wife. Caught up on my sleep, did a few chores, watched a football game or two. Had dinner with friends one night and with our kids the next. Nobody used phrases like “effective tax rate on the marginal dollar” or “progressivity slope,” or tried to convince me that black was really just a dark shade of white.

Getting back to Juneau was something of an adventure. Flight 62 was supposed to arrive about 10 a.m. Monday. It didn’t. Low clouds, snow, not enough visibility. Instead, we landed in Sitka about 10:30 a.m. and waited. And waited. And waited. Finally took another run at Juneau a little after 2 p.m. and made it, landing in a brisk snowstorm.

Could have been a lot worse. If we hadn’t landed in Juneau, the next stop was Ketchikan. At the rate we would have been losing ground to the south, by the time you read this I would have been in the real Disneyland. Glad that didn’t happen.

What’s been happening

Surprisingly enough, the legislature managed to get some work done without me. Both the powerful Senate Judiciary and House Resources committees, of which I am not a powerful member, passed out versions of the oil production tax bill. Both bills are much different than the bills passed by earlier committees, and much different from each other.

A lot of details have been changed, the most important being the tax rate and the dreaded progressivity slope, which is nerdspeak for the rate at which the tax increases as the value of a barrel of oil increases. Both bills restore the tax rate Gov. Sarah Palin wants – 25% of net profits – and increase that rate much faster than Palin’s ACES bill would as oil prices climb into the stratosphere.

On paper, each of these bills brings in more money than any previous version. Too bad we aren’t collecting these taxes on paper.

You can find a copy of the Senate Judiciary bill here. A copy of the House Resources bill should be posted here later today.

What’s happening now

The bills have moved to the Finance committees, where people are expecting yet another extreme makeover. Even if the current tax rate and progressivity slope stay pretty much the way they are, there are plenty of other places to make changes – allowable deductions, investment credits, retroactivity, etc., etc. – that will bring smiles to the faces of the oil company lobbyists and spokespeople.

That’s one of the problems with a net profits tax: Lots of ways to make taxable income disappear. Anybody who thinks our friends at Exxon, BP and Conoco won’t find every one of those ways – and probably invent a few of their own – must be a brie-eating socialist who has no faith in the free enterprise system.

What I’m thinking

I came to the session hoping that the facts would speak for themselves. They haven’t yet, and I’ve stopped expecting them to. I can still be bumfuzzled by details, but I’ve come to see that the details are of secondary importance. Details can tell me how to do something, but they are no good at all at telling me what to do.

Something’s been bugging me about the net profits approach to oil taxes ever since Gov. Frank Murkowski introduced his Petroleum Profits Tax.

At first, I thought it was that the tax didn’t get Alaskans a fair share of the scandalous profits the oil companies are banking these days. And – to be absolutely honest – I thought it was partly because it was proposed and pushed by Frank, who was never my favorite guy, even when he was just holding Ted Stevens’ coat in the U.S. Senate.

Digging deeper, I thought for a while it was because the state’s history shows that if you let the oil companies have any leeway, the next thing you know it’s 10 years later and you’re settling for pennies on the dollar. That still worries me, as it should worry anyone who has followed the state’s real relationship with the oil industry instead of swallowing all the happy talk spread by ambitious politicians and oil company PR departments.

But lately what I’ve been thinking about is this. The net profits tax is being sold as a way to influence oil company investment decisions. If we let a company have X deduction and Y credit, then they’ll decide to develop Z pool of oil.

Can we actually do that? Doubtful. Oil industry investment decisions are way complicated, and our tax policy is just one factor in those decisions. Not the most important factor, either.

But that’s not the biggest question I have about the net profits tax. The biggest question to me right now is this: When did we start accepting the idea that the most important decisions about Alaska’s economic future are going to be made by oil company moguls who don’t live in Alaska or answer to Alaskans?

Fifty years ago, my father’s generation demanded statehood because they were tired of having all the important decisions made by people in far-off Washington, D.C. Now, my generation is saying: It’s okay for those decisions to be made by people in far-off Houston and London.

When did that change happen?

More later,