Severance tax = wealth redistribution. If you own land in eastern Ohio, you lose!

Not to be political, but I fear that Gov. Kasich has abandoned his own principles with his proposed 4% severance tax.  Directly or indirectly, it is the landowner who will bear this new tax every time O&G companies deduct it from the landowner's royalty.  A landowner's minerals belong to the land-owner, not the state.  The state should not have the right to take away a percentage our our assets and give them to someone else.  To be blunt, that is simply wealth redistribution.

 

At a 15% royalty, a decent Utica well can easily net royalties of $15,000 per acre.  If I happened to own 100 acres of land, my 4% severance tax on $1.5M in royalties would amount to $60,000 (in addition to $576,000 in federal & state income tax estimated at 40%).  Why should the State have the right to take another $60,000 out of my pocket, and then dole it out as a fraction of a penny to each of Ohio's millions of taxpayers?  My burden results in a meaningless benefit which won't convince any Ohioan to start a business or not move to Florida.  Landowners need to do the math...  even a homeowner with a 1-acre lot is going to pay $600 in severance tax, and in return get a meaningless tax break.

 

Gov. Kasich thinks that he hatched a "populist" plan...  who wouldn't like a tax cut?  But this is unfair and unconstitutional --- being financed out of the pockets of landowners who are already going to be paying more than 40% in federal and state income taxes on their royalties, not to mention property taxes, CAT taxes, etc.  I would rather give that same amount of money to my local school district where it can make a difference and will benefit my own community.

 

Let's face it...  the state is already going to be receiving a huge windfall of increased income tax revenue from all of the taxpaying landowners who are receiving bonus payments and royalty income.  Why can't the state simply give some of that money back?  Why do they need to mandate a new additional 4% tax for distribution to the masses?  It's unnecessary, and it's designed to prevent the state from giving back one dime of its ballooning revenue.

 

Here's a even better idea...  and if you agree, please call the govenor's office as well as your state representatives.  The State of Ohio owns nearly 600,000 acres of public land in Ohio.  This land belongs to the tax-paying citizens ---  we are the owners, and the State is merely the caretaker.  Let's have the State lease out portoins of this public land where practical, and then use all bonus payments and royalties to give a dollar-for-dollar tax break to the citizens of Ohio.  This is the fair and principled approach, and would result in a much larger potential tax cut for the people given the state's massive land holdings.  Let the public benefit financially from the public's own land.  Don't steal it from the private landowner's pocket !

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Replies to This Discussion

The govt never gets enough money

One aspect of this tax that really bothers me and the reason I wrote the governor when this was first reported is what it will do to the landowner with an old 12.5 net lease being HBP and sold to a big oil co. I feel by the time this tax in taken what do those landowners get from that 1950 lease. They had no way to anticipate a raise in the at well head taxes to protect themselves like we can now if we push hard enough. I feel for neighbors that could have 36" pipes installed, a well drilled with what may amount to very small compensation. I think they would lose another .5 percent. I'm not sure how that's exactly figured. I took 12.5 and timed it by .04. I also thought I read months back that the tax adds up to 7%. 4% for the severance and 3% for the Excise (sp) tax. I'll look around for an older article about it.

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