Republicans Cut Taxes for the Oil Companies (If You Ignore the Part Where They Raised Taxes)

“If you repeat a lie often enough, people will believe it, and you will even come to believe it yourself.”

That’s a quote usually attributed to Joseph Goebbels, and though he didn’t actually say it (the source is actually a 1946 report from the House Committee on Un-American Activities which falsely attributed the comments to Goebbels), there is an element of truth in it.

Perception is reality, after all. That’s perhaps true in politics more than anywhere else.

Which brings us to North Dakota’s liberals repeating over and over again that Republicans cut taxes for the oil companies during the 2015 legislative session and it is “costing” the state today. Even contributing to the state’s current budget shortfalls.

The most recent example is this column from my colleague Mike McFeely headlined: “Yes, cut to oil tax has cost N.D. money”

This is simply not true. It’s not a matter of ideology or perspective, either. It’s math.

Per numbers from the Tax Commissioner’s Office, the reforms to the oil extract tax passed during the 2015 session have resulted in roughly $600 million in additional revenue for the state so far. This chart shows, month by month, what revenues would have been collected under the old tax code (red) and what has been collected under the new code Democrats are complaining about (blue) going back to January of 2016 when the policy was implemented:

So why do our liberal friends insist on saying that oil taxes were cut?

They’re upset that the combined extraction and production tax rate was cut from a top rate of 11.5 percent to 10 percent (with a trigger going to 11 percent when oil is over $90 per barrel).

That’s the only part of the 2015 reforms they want to talk about, because if they isolate that policy change and ignore everything around it then yes Republicans cut taxes for oil.

But there was another part to the 2015 reform. The Republicans (with a couple of Democratic defectors) also eliminated a massive low-price trigger exemption which would have reduced oil tax revenues by hundreds of millions of dollars had it been allowed to continue.

Because that exemption is gone, the oil companies paid hundreds of millions of dollars more than they would have.

We aren’t supposed to talk about that exemption though. “They are two separate policy issues and were handled as such by previous legislatures,” McFeely writes.

So we’re supposed to pretend as though tax burdens for the oil industry have gone down, even though they’ve gone way up, because extraction/production tax rate is a “separate policy” from the trigger exemption.

Absurd.

Let’s do a thought experiment. Suppose we are making changes to the income tax code. Suppose we lower your tax rate, but we also eliminate a great big deduction you were taking, and the net result is that you pay substantially more in taxes.

Would you be alright with people saying you got a tax cut because your rate went down? Would you be ok if we laughed when you say your taxes went up, arguing the deduction that was eliminated is a separate policy from your rate?

Of course not. Because they aren’t separate policies. Both the rate and the deduction are related to the actual amount of taxes you pay.

Just as both the extraction tax rate, and any trigger exemptions, are all related to what oil companies actually pay.

The State of North Dakota, amid a big downturn in oil prices, changed policies so that the oil industry paid more.

This has not “cost” the state anything. It has caused hundreds of millions of dollars in additional revenues to be collected.

If Democrats want to argue that it should have been made an even larger tax hike on one of our state’s most important industries by leaving the extraction tax rates alone, then fine. They’re welcome to that argument, though I’m not sure it’s a political winner.

But what they can’t do is say the change in the tax has cost the state money.

It hasn’t. That’s a lie, and no amount of repeating it will make it true.

 

Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and the host of the Rob (Re)Port on Fargo-based WDAY AM970 from noon-2pm weekdays.

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