When Democrats see spending growth slow they call it a spending cut.
When Democrats don’t get as large a tax hike as they’d like they call it a tax cut.
Back in 2015 state lawmakers, over the protests of most of the Democratic caucus, passed a reform bill for oil taxes removing a massive exemption in exchange for a lower top rate.
Since then Democrats have been pushing the idea that Republicans cut taxes for “big oil.” Most recently the Democrats, in the process griping about budget cuts, have been saying that oil taxes were “slashed.”
“Over the last several sessions, our legislative leaders pushed through tax cuts for oil companies and reduced corporate taxes in a very large way,” said Senator Jim Dotzenrod (D-Wyndmere) said in a recent release.
“As difficult as this budget is, future budgets will be even more challenging because we don’t have the ongoing revenue to support this approach – it’s just not sustainable,” House Minority Leader Corey Mock added. “Right now, we’re balancing our budget by draining all of our savings accounts, which are funded by the same oil taxes that have been slashed.”
But how can oil taxes have been slashed when, because of the reforms passed in 2015, oil companies have paid hundreds of millions more in taxes?
The 2015 reform eliminated a low-price trigger in the state’s oil tax code which would have come into effect in January 2016 due to falling oil prices.
That trigger would have cut the tax rate oil companies were paying pretty much in half. But because lawmakers got rid of it, oil companies have paid an additional $591 million in taxes.
This chart, based on data from the Tax Commissioner’s Office, shows what oil companies have paid in taxes versus what they would have had lawmakers not acted in 2015, starting in January of 2016 when the policy went into effect through February, the last month for which data is available:
Here are the cumulative totals of revenues oil companies have actually paid versus the much smaller amount they would have paid had lawmakers not acted:
What you are looking at is a $591 million tax increase.
And the trigger exemption would still be in place. “Yes, if the oil tax law had not been changed during the 2015 session the ‘triggered’ oil tax incentives would still be in place,” Tax Commissioner Ryan Rauschenberger told me yesterday. “January and February were above the trigger price but for the month of March we were back below. It would have taken 5 consecutive months above the trigger price for the incentives to come off and back at the top rate.”
This is the point at which Democrats say that the 2015 reforms didn’t just eliminate the oil tax trigger. They also lowered the top oil tax rate to 10 percent (with a top-end trigger to move it to 11 percent when oil prices are above $90 per barrel).
That’s what they’re calling a cut. Except, no cut happened.
What happened was the elimination of an exemption which resulted in more than $591 million in additional revenue for the state, and counting.
That’s a tax increase. Maybe not as large a tax increase as Democrats wanted, but for them to call it a “cut” is a flat-out lie.