The Cleveland Plain Dealer Misses The Mark On Kasich's Fracking Tax Proposal
Blog ››› ››› BRIAN POWELL
In Sunday's Cleveland Plain Dealer, Statehouse Bureau Chief Reginald Fields penned a 1600+ word article describing Ohio Governor John Kasich's (R) new proposal to impose a modest tax on fracking and give a personal income tax reduction that would be tied to the amount of natural gas production. Fields cited seven conservative or Republican sources, framing the controversy around a largely manufactured conflict between Kasich and the anti-tax conservatives of his political base. Meanwhile, Fields entirely ignored any discussion about the public health and environmental costs of Kasich's plan. Fields also failed to acknowledge ethical concerns over linking Ohio citizens' financial well-being with the potentially dangerous industry practice of fracking.
Fields summarized the bill:
Ohio Gov. John Kasich will propose a new tax on a form of oil and gas drilling known as horizontal fracking and then use the fresh revenue to give a personal income tax cut to Ohioans, The Plain Dealer has learned.
The complicated plan also would make changes to various existing taxes petroleum companies pay for pumping out oil and natural gas from beneath Ohio. And it even contains a tax break for some smaller operators, according to documents obtained by The Plain Dealer and confirmed by the governor's office.
The revenue would go into a newly created fund requiring legislative approval, which would be used to support the tax cut. The income tax cut would apply when there is annual growth on revenue of at least one-third of 1 percent. If there isn't sufficient growth, Ohioans wouldn't get the tax cut, but the pool of money would carry over to the next year.
The governor's office is projecting the first income tax cuts could come in calendar year 2013, but they are more likely to start in 2014 -- the year Kasich is up for re-election.
So, the amount of the income tax cut would be tied the amount of oil and gas extracted and according to market prices for those products.
Fields claimed that Kasich's plan is "expected to get a heap of criticism from conservatives who see it as nothing more than a tax hike," but the sources he used to back this up don't bear out that narrative. He quoted a spokesman for Ohio House Speaker William G. Batchelder (R), who is reserving judgment until he can "see what the actual language of the bill is," and briefly noted that Senate President Tom Niehaus (R) is "said to have" concerns about the plan. Meanwhile, Grover Norquist's Americans for Tax Reform, which was "consulted" about the proposal, is tentatively approving the tax plan and giving Kasich the "benefit of the doubt" regarding any potential concerns about increased taxation. This lukewarm reaction to Kasich's proposal hardly qualifies as "a heap of criticism."
Fields did note real criticism coming from the Oil and Gas Association, whose members would face a slight increase in the cost of drilling in Ohio. But this predictable position adds little to a serious policy discussion.
Fields gave little attention to voices who believe that a policy discussion on fracking should be a little broader than the question of 'a nominal tax vs. no tax at all.' The article gave a cursory nod to two House Democrats proposing an alternative plan to tax the industry at a higher 7%, but was entirely devoid of any discussion about the external costs of fracking that will be borne by taxpayers. The practice of fracking may be responsible for toxic drinking water and increased earthquakes. If Ohio's taxpayers are footing the bill for public health hazards and infrastructure damage, among other costs, then a couple extra bucks off their income tax won't mean much.
Nor did Fields give any attention to the ethical dilemma behind the policy Kasich is proposing. By tying the natural gas industry's output to income taxes, he would provide the Ohio electorate with a perverse choice: accept the risks that fracking poses to the environment, public health and worker safety -- or pay higher taxes.
Ohio is just beginning to address the impending explosion of fracking in the state. Hopefully, the Cleveland Plain Dealer will provide a more balanced discussion of the facts in the months ahead.