Innovation Ohio Slams Kasich “Frack Tax” Proposal

For Immediate Release: March 22, 2012
Contact: Dale Butland, 614-783-5833

Innovation Ohio Slams Kasich “Frack Tax” Proposal

Think Tank Says Big Oil and Wealthiest Ohioans Would Benefit Most

Columbus—Innovation Ohio, a progressive think tank headquartered in Columbus, today charged that Governor Kasich’s plan to fund another income tax cut by marginally raising Ohio’s oil and gas severance tax (currently the second-lowest in the nation) would be a “giveaway to the oil companies, a windfall for the wealthy, and another body blow to schools, local governments, and middle income taxpayers.”

Specifically, IO says:

  • Kasich’s proposed oil and gas severance tax rates are so low that Ohio would continue to lag far behind other states.  Specifically, Kasich’s proposal to reduce the current tax on natural gas and raise it gradually on oil and natural gas liquids (to a high of just 4%), would still leave Ohio with the 2nd lowest tax rate in the nation on gas, and the 2nd lowest tax rate on oil among the top ten producing states.
  • Kasich’s plan would also leave local governments holding the bag when it comes to road and other infrastructure damage caused by the heavy trucks and other equipment used in fracking operations.  Under his proposal, oil companies would be assessed an “impact fee” of $25,000 per well—but be allowed to recoup that money by reducing their local property taxes by the same amount.  In other words, the “impact fee” is revenue neutral—which, by definition, means no increased money for local governments who will still be on the hook to pay for damages caused by the oil companies.
  • Kasich’s “across the board” income tax cut would give taxpayers earning between $45,000 and $50,000 an extra $19 in 2014, and just $65 when fully phased in in 2017.  Meanwhile, wealthy Ohioans earning $350,000 and up would receive an average of $1,539 in 2014, and a whopping $5,193 in in 2017.
  • If Ohio were to adopt Texas’ middle-of-the-pack severance tax rate (7.5% on natural gas and 4.6% on oil and natural gas liquids)—and then use the revenue to offset state cuts to schools and local governments—enough money would be generated to pay for damages to local roads and infrastructure, stop the layoffs of thousands of police, fire and other public safety workers—or prevent increases in local property taxes that pay for schools.

Said Innovation Ohio President Janetta King:

“Governor Kasich and the state legislature say that Ohio’s severance taxes must be ‘competitive’ with those of other states.  We agree.

“But being ‘competitive’ doesn’t mean being ‘the lowest.’  At a time when Big Oil is poised to take up to $636 billion in natural resources out of our state, there is no reason on earth why  Ohio taxpayers should not get their fair share—especially when we’re already being gouged for $4 per gallon gasoline.

“Governor Kasich’s proposed income tax cut is also a joke—at least for middle income Ohioans. Recently, the Governor rubbed two dimes together to point out that we’re currently charging oil companies only 20 cents tax on each barrel of oil.  But for the average taxpayer, his tax cuts would mean 4 dimes—or 40 cents per week. Meanwhile, the wealthiest Ohioans would get a tax break worth thousands of dollars a year.

“Ohioans have some choices to make.  We can let oil companies deplete our resources and pay far less than they pay in every other state but one.  Or we can ask Big Oil to pay their fair share and give Ohio taxpayers a fair shake.  We can cut taxes for average taxpayers by 19 bucks, while the wealthiest Ohioans rake in thousands. Or we can use severance tax revenue to replace some of the money Gov. Kasich cut from schools and local governments, save the jobs of teachers, police and firefighters, and repair the damage oil companies will do to Ohio roads and  infrastructure.  The choice is ours.  And the clock is ticking.”