Revenue drop merits end of drilling tax credit? That's a leap

The Oklahoman Editorial Published: December 18, 2012

The Oklahoman has supported the state drilling credit, primarily for competitive reasons: Exploration companies will go to states with the best incentives. We've also supported the tax credit for wind energy. Progressives typically hate the one but love the other. That's a double standard.

In the case of Solyndra and other government grantees, Uncle Sam's largesse has extended not just to a general tax credit (for which all players can apply) but to specific companies. This can — and has — resulted in crony capitalism that put taxpayers on the hook for failed ventures.

Perhaps it's a leap to compare a state incentive to a federal giveaway scheme, but the principle competes on the same playing field. Oklahoma lawmakers determined years ago that staying competitive with Texas meant creating a modest tax credit for risky drilling. In another state, wind or solar power might have been the focus, but these commodities don't produce much government revenue: The sun and air can't be taxed in the way hydrocarbons are.

The oil and gas industry's contribution to Oklahoma can't be measured solely in terms of the gross production taxes it pays. In fact, that's the poorest measure. High-paying jobs in the industry contribute enormously to the sales tax and the state income tax. This is a heritage industry that “caught” a break with the tax credit for risky drilling ventures, a credit Blatt and his donors find to be “unaffordable and unnecessary.”

Which is exactly how we'd describe much of what the federal government does these days.

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