MINOT, N.D. — North Dakota's politically impotent Democrats have been whining about reforms made to our state's oil taxes since they were implemented in 2015.
Given what the coronavirus pandemic is currently doing to the oil industry in our state, maybe they'll finally can it.
To hear our liberal friends tell it, these reforms were little more than a sop to Big Oil, those dastardly villains who reliably produce a product we all use at prices we can all afford while simultaneously pumping billions upon billions of dollars into our state's economy.
Every election cycle, the Democrats and their various mouthpieces in the state's media trot out this talking point about the 2015 reforms, and every time they do, it fails to get any traction.
At least as measured by results at the ballot box, anyway.
The most recent example of griping, from earlier this year, is former Fargo City Commissioner (and aficionado of trite, sepia-toned Greta Thunberg "art") Mike Williams bellyaching in a letter to the editor about all the money our state government is missing out on because of the oil tax reform.
Unfortunately, politicians like Williams only want to talk about one part of the 2015 reforms, which is the reduction in the top oil tax rate.
Here's what North Dakota's lawmakers actually did:
- They completely eliminated a tax break, triggered by low oil prices, which effectively cut the oil tax rates in half.
- They lowered the top rate from 11.5% to 10%.
You can't talk about one without talking about the other, and here's why: According to numbers I obtained from the Office of the Tax Commissioner, the combined impact of these changes, from implementation in January of 2016 through January of this year, has been over $577 million -- more than a half-billion dollars -- in additional taxes paid by oil producers.
Here's the spreadsheet provided to me by the Tax Commissioner's office:
If our liberal friends think that's a handout to the oil industry, I'd hate to see what they think a tax hike is.
Here's where things get interesting in the current moment.
Our state's oil industry is taking it on the chin. The coronavirus pandemic has driven down demand. Meanwhile, countries like Saudi Arabia and Russia are using their state-owned companies to manipulate the global markets, further driving down oil prices. And for North Dakota's oil industry, specifically, there is renewed legal uncertainty around the Dakota Access Pipeline, a piece of infrastructure responsible for moving about half of our state's oil production to market.
The federal judge overseeing the long-running legal challenges filed by intransigent political zealots against the pipeline has ordered a new environmental review and is in the process of collecting and reviewing briefs on whether the pipeline should continue to operate while that review is taking place.
For this post, however, it's only the low oil prices which matter.
If our liberal friends had got their way and we'd forgone the 2015 oil tax reforms, we'd still have a low-price trigger in place, which could cut in half the oil tax rates at a time when our state's budget is already facing a tremendous amount of uncertainty.
Shouldn't we be glad they lost that fight?
The Democrats always refute this argument by saying they were never against eliminating the trigger. They were only against lowering the top rate.
At which point we must remind them that, in politics, you have to give something to get something. In 2015, the North Dakota oil industry lost a massive low-price tax exemption, which, frankly, would be coming in pretty handy for them right now if it were still around.
What they got in return was a slightly lower top rate.
That's a good compromise, and it's high time the Democrats stop complaining about it.
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Rob Port, founder of SayAnythingBlog.com, is a Forum Communications commentator. Reach him on Twitter at @robport or via email at email@example.com.
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