This one is sure to disappoint landowners. In an Obamaesque move, conservative Republican Ohio Gov. John Kasich is set to propose a new tax on Utica and Marcellus shale gas drilling in order to reduce Ohio state income taxes.
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.
But the moneymaker in the deal is the new tax Kasich wants to apply to Ohio’s most sought-after resource, the natural gas liquids trapped deep below in Marcellus and Utica shale formations reached through fracking, a process that shoots a water and chemical concoction down through a drilled hole to break up the shale. Big Oil is salivating at the opportunity to reach these gases — butane, ethane and propane.
Over the next five years, based on today’s market prices, Ohio could net between $666 million and $1 billion through the new oil and gas tax structure, with those dollars funneled back Ohioans in form of an income tax cut. The governor is expected to announce the plan next week.*
Landowners and drillers will bear the burden of this massive wealth transfer plan. Every dollar forcibly taken by the state of Ohio from the people who own the asset (landowners) and those who work hard to extract the asset (drillers), will be given to people who did nothing to earn it. It’s socialism plain and simple, no matter if it’s a Republican or Democrat who’s doing the wealth-sharing. What a disappointment, Gov. Kasich.
*Cleveland The Plain Dealer (Mar 4, 2012) – Gov. John Kasich to propose new tax on fracking to give Ohioans a personal income tax cut