SECOND OF TWO PARTS—Alaskan tax reform: Gas raises questions

06/01/2009
The question whether success of Alaskan tax reform with oil foretells comparable success with natural gas hinges on a side effect of high progressivity: a very high marginal rate. As noted in the first part of this series, as the progressivity charge rises it affects the tax rate applied to all the taxed hydrocarbons (OGJ, May 25, 2009, p. 20). Click here to enlarge imageThis effect is most pronounced, for example, when the production tax value (PTV) is around $92.50/bbl, when about 93¢ of an extra $1/bbl of revenue goes to the state. Why? Before adding the extra dollar, the base production tax (BPT) was 25%, and the combined progressivity tax (CPT) was 24.6% for a total of 49.6%. Adding...

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