Why California Needs An Oil Tax

From The Daily Californian

Education is suffering. The economy is forcing too many people to rely on government assistance, and we are not doing enough to promote renewable energy.

We have a problem when California, the ninth largest economy in the world, has a 9.8 percent unemployment rate. Enrollment at California community colleges has dropped by 500,000 since prices began increasing in 2008. This is due to the doubling of unit costs for some of the lowest-income people in California. How can we expect people to get high-paying jobs if they can’t even afford to enroll in our community colleges?

One way we can start to heal California’s economy is with an oil severance tax. It is time Californians knew the truth about this tax. A severance tax is a tax on oil producers, not consumers. Oil interests have spent hundreds of millions of dollars over the course of decades turning this falsehood into truth in the minds of voters. The campaign for a California oil tax seeks to turn the spotlight on the numbers and facts about severance taxes.

First, we must ask ourselves why Alaska and Texas would implement a 25 percent severance tax and a 7.5 percent severance tax, respectively? After they passed these taxes, which raised substantial revenue, why didn’t their gas prices skyrocket? The answer is because oil is not a state, or even a national, commodity. Oil is a commodity bought and sold globally based on the supply and demand of the global market prices for oil. Because oil prices are mostly set on the global market, state severance taxes aren’t passed on to consumers.

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