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Petroleum exports: good for consumers, coffers, companies by Paul Driessen

Eliminating prohibition on exporting US oil and gas will help families, security, allies.

America’s crude petroleum export ban is an antiquated byproduct of the 1973 Arab oil embargo. Repeal is long overdue.

Hydraulic fracturing (fracking) has sent U.S. oil, natural gas, and propane production soaring. Natural gas output is up 36% since 2005. Oil output is expected to increase another 780,000 barrels per day (BOPD) in 2014 and reach 9.6 million BOPD by 2019. The United States is now importing half of what it did in 2005.

All this activity has created millions of oil patch and downstream jobs. Royalty and tax revenues have skyrocketed, and cheaper natural gas fuels and feed stocks have fostered a manufacturing and petrochemical renaissance.

Expanding natural gas use has also reduced carbon dioxide emissions, which should encourage people who still worry about “dangerous manmade climate change.”

petroleumbyproducts

For a larger view click on the pie chart.

Increased production has also enabled companies to export more gasoline, kerosene, jet fuel, lubricants, and other finished products, since refined product exports were never prohibited. Indeed, U.S. refining capacity is at record levels.

However, because they were designed to process heavier crude oils, refineries are limited in how much domestic sweet crude they can handle. Exports would provide an important outlet for excess crude supplies. That in turn would encourage additional exploration and production, protecting jobs, further revitalizing our economy, and multiplying royalty and tax revenues.

That exploration and production must go beyond state and private lands, though. Opening more federal onshore and offshore lands to leasing and drilling is essential and would magnify these benefits many times over. These resources belong to all Americans, not only to those who oppose fossil fuel use.

In many cases, adding fracking to the equation would expand supplies even further, by making otherwise marginal plays more economic to produce, reinvigorating old oil and gas fields, prolonging oil field life, and leaving fewer energy resources behind in rock formations.

Asia needs the energy to fuel its growing economy and support its still inadequate petroleum production infrastructure. Most of Europe’s natural gas comes from Russia, which charges high prices, engages in energy blackmail, and is rattling sabers in Crimea, Moldova, and Ukraine.

Right now, many European countries prohibit fracking, and EU climate and renewable energy policies have sent business and family energy prices into the stratosphere, killing jobs and preventing families from heating their homes properly.

Expanding domestic U.S. oil and gas production and exports would aid EU workers and families, while also improving America’s gross domestic product, balance of trade, national security, job growth, and prestige. Contrary to what some have argued, American consumers would also benefit, because exports would help stabilize global supplies and prices, keep OPEC and Russian price hikers at bay, and make the United States less reliant on imports and less vulnerable to supply disruptions.

What actually hurts consumers are government and environmentalist opposition to leasing, drilling, fracking, pipelines, and hydrocarbons – and their support for expensive, land-intensive, water-hungry, lower-energy-content ethanol and biofuel “alternatives.”

It is possible that the current $9 per barrel difference between U.S. and global oil prices could shrink slightly if some oil is exported. Barclays Bank says eliminating the export ban could add $10 billion a year to overall national gasoline costs.

However, this potential increase is just 3% of an average household’s annual $2,912 gasoline outlay. That’s $87 a year or $1.68 a week – half the price of pumpinggasone Starbucks Latte Grande.

The consumer impact of America’s massive land and petroleum resource lockdowns is much higher.

Of course, realizing these benefits requires producing more, ending the export ban, and building more pipelines, natural gas liquefaction plants, and shipping facilities. That can and should be expedited.

Europe can and should produce more of its own oil and gas. It has vast petroleum potential waiting to be tapped via fracking. Opposition to producing this petroleum is no more ethical than environmentalist demands that the United States keep its own enormous untapped petroleum supplies locked up, while we deplete other countries’ assets and put their wildlife habitats at risk from production-related accidents.

Nor is it ethical or sensible for President Obama to ask Saudi Arabia to send us more oil, rather than telling his energy and environment regulators to foster more production here at home.

In short, America should produce more here at home, export both crude and refined petroleum to Europe and Asia, and support companies that want to take their fracking technology and expertise overseas.

These actions will benefit American companies, workers, families, consumers, balance of trade, environmental quality, and government revenues. We must not let anti-hydrocarbon ideologies or misinformed policy positions perpetuate this antiquated ban.

NOTE: This article first appeared in Investor’s Business Daily.

About Paul Driessen

Paul Driessen

Paul Driessen is senior policy adviser for the Committee For A Constructive Tomorrow (CFACT), which is sponsoring the All Pain No Gain petition against global-warming hype. He also is a senior policy adviser to the Congress of Racial Equality and author of Eco-Imperialism: Green Power – Black Death.

An Open Letter To Ways And Means

Welcome back to Washington and Happy New Year

As you return to the business of the House Committee on Ways and Means, you and your colleagues will, in many ways, determine the direction of our nation by the decisions you will soon make on fundamental tax reform.

You have a clear and distinct choice to make. You can continue to pander to the special interests that will forever hold you hostage to their gluttonous demands, or you can break from this insidious cycle and fully represent the will of the people who elected you.

If you choose to continue in the bondage of special interest slavery, the demands they exact will rise to levels that even you cannot imagine. Once the fatted calf becomes addicted to the feed trough, its’ appetite becomes insatiable.

Contrast this to the people who elected you who simply want to pay their fair share of taxes without the fear and intimidation of an agency that continues to be used as a political weapon.

Even the IRS’s own watchdog, Nina Olson, stated in her just published annual report, “Public trust in [IRS] fairness and impartiality was called into question because of reports the IRS subjected certain applicants for tax exempt status to greater review based on political-sounding games.”

Sadly, Olson’s only remedy is an IRS generated U.S. taxpayer Bill of Rights. By the way, didn’t you already try this in 1988 when Congress passed the first of three Taxpayer Bill of Rights?

To Olson’s suggestion, ladies and gentlemen, isn’t this a little like the fox guarding the hen house; just like the U.S. Justice Department appointing Barbara Bosserman to lead the IRS targeting investigation?

fox guards henhouse

Silly me, I am sure any individual who shelled out over $6,000 in donations to the Obama campaign will show total impartiality during a criminal probe involving conservative organizations.

The bottom line is this – the American people want a simple and fair system of taxation without all the drama, theatrics and corruption. They want the fox to leave the hen house and they want their representatives to put a stop to the longstanding reign of terror by the IRS.

The FairTax® Plan does this and more.

Reduced to its most basic terms, the FairTax eliminates taxes on wages while taxing wealth and borrowing when spent. It eliminates the income/payroll tax system and replaces it with a single rate tax on consumption.

More importantly, it is fair, simple and universal in application – no exceptions, no exclusions, and no more special interests feeding at the trough.  And, it fosters economic growth and efficiency while fully funding the government. 

You will soon have a decision to make on fundamental tax reform.

Option 1: You tinker with the current system, call it major reform and continue in the bondage of special interests.  With this option the American people continue as the losers.

Option 2: You represent the will of the people who elected you and enact HR 25, The FairTax Act, freeing them from the bondage of an out-of-control IRS and a gobbledygook tax code that is fast approaching 100,000 pages. With this option, the American people have a fair and simple tax code that also eliminates the yearly tax return nightmare that has already begun.

Which decision will you make? Perhaps you can draw inspiration from General Robert E. Lee who once said, “You have only always to do what is right. It will become easier by practice, and you enjoy in the midst of your trials the pleasure of an approving conscience.”

Your electorate awaits your decision. Remember, they too have decisions to make in November 2014.

Coalition formed to repeal the 16th Amendment

A broad coalition of national organizations, hosted and managed by Competitive Governance Action, whose initial members include Americans For Fair Taxation®, Tea Party Patriots, Free Market America and Americans for Limited Government, announced a joint effort called “Repeal 16: A Coalition to Repeal the 16th Amendment.”

The coalition’s message to Washington lawmakers is straightforward: End the current corrupting tax system and the IRS.

Cynthia T. Canevaro, Executive Director Americans For Fair Taxation

Cynthia T. Canevaro, Executive Director, Americans For Fair Taxation, in an email states, “As FairTax supporters we know how the current tax code has corrupted our economy, our political system, small businesses and the livelihood of countless American citizens.  This summer’s scandalous revelations of IRS abuses are just the latest example of how the IRS, for 100 years, has systematically violated the fiduciary trust given to it by the American people.”

“Although there have been numerous hearings and calls for action, it has turned out to be much ado about nothing because the current tax code is, in reality, an incumbent Member’s delight.  Why? Because it enables the status quo to maintain complete control over you the taxpayer,” notes CGA.

According to CGA, “Repealing the 16th Amendment will allow citizens from all political perspectives to finally have an open, transparent and honest debate about comprehensive tax reform, without getting bogged down on which plan is best. Repeal 16 will finally give supporters of fundamental tax reform a neutral vehicle to address the most pressing issue of the day – eliminating the IRS and Repealing the 16th Amendment.”

Canevaro states, “While supporting the coalition, Americans For Fair Taxation will continue to proudly and aggressively advocate the FairTax Plan as the only viable choice for fundamental tax reform.  With a successful Repeal 16 campaign, we know the FairTax Plan will now be in a position to be the tax reform plan of choice for elected officials and the American people who want jobs and economic growth.”

repeal petition has been posted at www.Repeal16.org for those who see the IRS and income tax as a a threat to American prosperity. The coalition’s initial goal is to recruit 10,000 Americans to sign the petition. “With Congress coming back into session this week, timing is of the essence”, notes Canevaro.

Canevaro, states, “We are excited about the opportunities the new Repeal 16 coalition will bring to the FairTax, and look forward to being on coalition team.”

ABOUT COMPETITIVE GOVERNANCE ACTION

Competitive Governance Action is a 501(C)(4) organization committed to education and advocacy to manifest the concept that problems should be solved by the smallest, least centralized, most local authority that may effectively address the matter. Central to the concept is the devolution of political power from the federal government to state and local governments, to individuals and to non-government community and religious institutions.

Tax Collector answers questions about taxes in Florida

Barbara Ford-Coates

April is National Tax Burden Month. WDW – Florida has asked a tax collector to answer some questions about taxes in Florida. We want to thank Barbara Ford-Coates, Florida Tax Collector serving Sarasota County, for providing answers to our tax questions. Since property taxes comprise the largest dollar amount collected, the below answers from Barbara Ford-Coates address those taxes.

1. What kind of role do you play in shaping or implementing Florida’s tax policy?

The Florida Legislature has the primary responsibility for the state’s tax policy. The Tax Collector’s role is to advise the State on the most efficient way to implement the final law. [E.G.  Florida Tax Collectors recently worked to give taxpayers the option of receiving their tax bill(s) electronically.]

2. What are some of the most common misconceptions citizens have about Florida state taxes?  What are some of the most common mistakes you see citizens make when filing their tax returns?

One misconception we hear about relates to the time period. Since Florida taxes are collected in arrears, taxpayers sometimes believe they are paying the following year’s taxes. As an example, the 2012 tax bills were mailed around November 1st of 2012 and were payable through March of 2013.   A taxpayer who paid the bill in March of 2013 may have thought they were paying the 2013, rather than 2012 tax bill. The most common mistake we see is sending the wrong amount.

3.  How do incentives work? Credits? Sales tax holidays? Do you think these help Florida?

Tax collectors have no involvement in incentives, credits or sales tax holidays.

4.  How can we make Florida’s tax code simpler and more citizen-friendly? What changes would you suggest?

I think the concept of a locally elected official (Tax Collector, Property Appraiser etc.) working to implement State tax laws provides the best opportunity for citizen-friendly administration.  As an elected official, I have both a duty to the state and the taxpayer. As such, I must always work to make paying taxes as simple and easy as possible for the taxpayer.  In that role I can and do advise the state how to improve the process.

5.  Is your agency doing all it can to collect the taxes it is owed?  What is the consequence for not paying Florida taxes on time?

Within a year of receiving the property tax roll from the Property Appraiser and the non-ad valorem districts, we collect over 99.5% of the roll. Of the remaining unpaid taxes, we continue our focused efforts (selling tax certificates, field visits) to collect the rest.

Failure to pay real estate taxes on time results in additional costs to the taxpayer. If the taxes remain unpaid two years after the date of delinquency, the taxpayer is at risk of losing their property. Delinquent real estate taxes are primarily collected through the sale of tax certificates (tax liens) to investors who pay the tax in exchange for having a lien on the property. Unpaid tangible taxes also result in additional penalties and interest to the taxpayer.  Delinquencies are collected through a variety of enforcement efforts that include the issuance of warrants, field visits, contacts by phone, email and correspondence, and the sale and seizure of assets.

The state agency that deals most with Florida taxes is the Department of Revenue.

WDW- Florida provided James McAdams, Director Property Tax Oversight, these same questions. Director McAdams provided this reply, “Thank you for the opportunity to participate in your article about tax administration. Since the Department of Revenue does not play a role in the development of tax policy your invitation would be more properly directed to members or staff of the Florida Legislature.”

A copy of this column has been sent to Governor Rick Scott, the Florida Cabinet and all Florida legislators.

Former Mayor Responds to Sarasota County School Board Raising Taxes

David Merrill, businessman and the former Mayor of the City of Sarasota, Florida, sent the below email to all Sarasota County School Board members.

School Board Members,

I urge you to reject the proposed increase in property taxes for schools. You can eliminate the need for the extra taxes by cutting wasteful policies and programs, and you have failed to make the case that the money will actually improve the education of our children.

Instead of looking to more taxes, you can find more than enough savings to eliminate the need for the taxes by replacing your credential-based compensation system for teachers.  Arne Duncan, the Secretary of Education, and Bill Gates have said we need to find the money to improve our schools by eliminating the waste and inefficiency from the type of compensation system that you use. Yet, other than perhaps for some new-hires, Sarasota’s teachers’ salaries are set from a salary table with two variables: advanced degrees and years of teaching.

In 2010 Arne Duncan said, ”There is little evidence teachers with masters degrees improve student achievement more than other teachers.” Despite this information, Sarasota pays for more advanced and special degrees than any other district in Florida. A full 67% of Sarasota’s teachers have a degree above a bachelor’s degree.  While some advanced degrees may be appropriate, does giving two-thirds of the teachers at Phillipi Shores Elementary School higher salaries because they have advanced degrees really do anything to help our children learn the alphabet and the multiplication tables?

When it comes to teacher longevity, Sarasota’s teachers have the 7th highest average longevity out of the state’s 67 school districts. However Harvard Professor Paul E Peterson’s study titled “It’s Easier to Pick a Good Teacher than to Train One: Familiar and New Results on the Correlates on Teacher Effectiveness” reports that there is little increase in a teacher’s effectiveness after the first three years of teaching.  But you continue to increase teachers’ salaries based solely upon the number of years that they’ve been teaching, when, instead, we should pay them based on a performance evaluation like other professionals.

Some of you may say that you know these arguments, but politically you can’t cut teachers’ pay.  Therefore, in the absence of courage to confront the teachers union, your argument is that you have no choice but to increase taxes.  But, based on FCAT and EOC Assessment scores, you can’t show that you have been good stewards of the half-billion dollars you have collected from the referendum-initiated school tax since 2002.

Looking at our FCAT history, Sarasota’s ranking among Florida’s school districts on the high-school Reading FCAT and Math FCAT are lower today than they were a dozen years ago.  For the first three years of the high-school Math FCAT back in 2000, 2001, and 2002, Sarasota’s score was either the second or the third highest in the state. Likewise, for the first two years of the high school Reading FCAT in 2000 and 2001, Sarasota’s scores were either second or third in the state.  When the school-tax referendum passed in 2002, everyone looked forward to new and innovative educational strategies to build on our excellent school district, but, instead, the school district immediately went into an inexplicable funk, from which you’ve not yet recovered.

(I use the FCAT scores from the highest grade in high school that the test is given because they include the cumulative learning from lower grades, and they are the closest measure of the performance of your finished product, the high school graduate.)

Sarasota’s Ranking on High School FCAT among 67 Districts

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Math
3
2
3
10
11
12
9
10
11
12
6
6
Reading
2
3
6
16
12
16
9
13
12
12
6
9
Science
n.a.
n.a.
n.a.
n.a.
n.a.
11
8
11
12
10
11
9

 

Fortunately, we’ve begun to regain some of our former glory.  On the recent Algebra EOC Assessment, Sarasota had the second highest score, which may be the beginning of getting back to where we were 11 years ago.

Unfortunately, despite the hundreds of millions of dollars of supplemental taxes that taxpayers have given you since 2002, Sarasota’s high school student’s FCAT scores are still determined more by Sarasota’s favorable demographics than the school district’s extra efforts.  As you know, demographic factors such as adult personal income, percentage of free and reduced lunch, adult educational levels, and student racial composition are good predictors of a district’s FCAT scores when considered together.  In fact, there is a good argument that our county and city commissioners are more responsible for Sarasota’s FCAT scores than the school board since the commissioners’ policies have had the most influence on our demographics.

If you were to chart these demographic factors for Florida’s school districts, most school districts’ FCAT scores would fall within a narrow band of where one would expect to find them based on their demographics.  However, when districts deviate from their demographic prediction, it’s possible that their school district is doing something different from the other districts.

Accordingly, there are three districts on the high school FCATs who have challenged Sarasota’s scores, but who shouldn’t be able to based on their demographics alone. These districts, Sumter, Gilchrist, and Wakulla, all have less attractive demographics for adult income and educational levels compared to Sarasota, and their free and reduced lunch percentages are either similar to or higher than Sarasota’s.  Even with these unfavorable demographic characteristics, and along with having less money per student, fewer teachers with advanced degrees, less teacher experience, and lower teacher pay than Sarasota, these lower-income districts have achieved some impressive FCAT scores. They are obviously doing something right given what they have to work with.

District
County Adult Data
2011 11th Grade Science FCAT Students
Teacher Data
2011 High School FCAT Scores
Personal Income
% College
% High School
% Free-Lunch
% White
Advanced Degrees
Median Salary
Science
Math
Reading
GILCHRIST
$29,682
15%
72%
48%
92%
33%
$42,829
322
339
324
SARASOTA
$52,331
34%
87%
38%
72%
67%
$55,264
317
339
322
WAKULLA
$28,711
22%
78%
35%
82%
37%
$37,042
317
338
322
SUMTER
$24,836
17%
77%
45%
71%
33%
$42,365
320
334
317
FLORIDA
$38,210
23%
76%
45%
47%
41%
$45,723
307
329
309

 

If you could show a similar pattern of consistently having higher test scores than our demographics alone would predict, you could make an argument that you are efficiently and effectively using your resources, and that giving you more resources could lead to even higher test scores. However, you can’t make the argument because our high school students don’t consistently outscore the districts with similar or more favorable demographics.

On the 2011 FCAT tests, there were six districts that outscored Sarasota’s combined test scores and who also have demographics at least as favorable as Sarasota’s.  (I’ve excluded Gilchrist, which is shown above.) The districts are St. Johns, Okaloosa, Brevard, Seminole, Martin, and Santa Rosa. Each district has its favorable and unfavorable demographic factors, but they would all be considered similar.

Some key characteristics for these districts are shown on the table below.

District
County Adult Data
2011 11th Grade Science FCAT Students
District Data
2011 High School FCAT Scores
Personal Income
% College & Prof. Degree
% Free-Lunch
% White
Teacher Advanced Degrees
Teacher Median Salary
All Gov. Revenue Per Student
Science
Math
Reading
ST. JOHNS
$ 48,640
40%
13%
84%
41%
$44,370
$        9,360
324
344
332
OKALOOSA
$ 41,024
33%
23%
74%
42%
$48,779
$        9,245
328
342
330
BREVARD
$ 37,284
33%
25%
67%
43%
$42,421
$        9,226
326
341
326
SEMINOLE
$ 40,133
40%
31%
60%
48%
$43,301
$        8,910
318
343
327
MARTIN
$ 51,723
33%
25%
71%
41%
$43,677
$      10,739
321
340
326
SANTA ROSA
$ 34,838
32%
28%
80%
37%
$42,729
$        8,791
317
338
331
SARASOTA
$ 52,331
34%
38%
72%
67%
$55,264
$      11,961
317
339
322

 

Although the demographics are similar, as the chart shows, the Sarasota’s median teacher pay is 25% higher than the average of the other districts, and Sarasota takes in 28% more tax revenue per student than the other districts on average, or about $2,500 per student.  And, yet, with more lower-paid teachers and far fewer financial resources, these other districts have typically outscored us.

To put a better perspective on the magnitude of this disparity in revenues between districts, Sarasota has about 40,000 students, so a difference of $2,500 per student amounts to $100,000,000.  That’s how much Sarasota could save each and every year if we matched the average budget of the other six districts above.  Or, said another way, that’s how much money we could save if our school district were as efficient and effective in delivering high-scoring high-school graduates as other top districts – like we used to be a decade ago.

The table below summarizes the calculation for the extra tax burden that Sarasota taxpayers must fund annually above what the other top districts on average must pay.

Calculation of Sarasota’s Extra Tax Burden Relative to Top-Scoring Districts
Sarasota’s Per-Student Tax Revenues
Avg. Tax Revenue of 6 Higher-Scoring Districts
Higher Tax Burden for Sarasota Per Student
Sarasota’s Student Enrollment
Sarasota’s Total Extra Tax Burden
$11,961
$9,379
$2,583
41,076
$106,078,770

 

So, the questions before us are whether or not Sarasota has the potential to be the top school district in Florida, and whether we need to collect an extra $100,000,000 in taxes to do it.  And I’ll answer the first question with an unequivocal “Yes!”  And I’ll answer the second question with a “Hopefully not”.

The first question is easy to answer because we right there at the cusp a decade ago.  Back then, before the extra taxes started gushing in, our high school kids were just shy of having the highest scores on the FCAT.  In fact, it was the promise of being the top school district that got the voters to rally behind the property-tax increase in 2002 after having voted down a similar referendum in 2000.  Our recent 2nd-place score on the Algebra EOCA shows that we still have the potential, and it’s not unusual in the lower grades for us to have top FCAT scores.  By effectively using the financial resources that the public has given you, you can overcome any demographic advantages that even a district like St. Johns enjoys, and our high school students can be the very best in the state.

However, the reason I don’t support a continuation of the extra $100,000,000 in taxes is because the need for it is purely remedial. There are only two reasons that the extra taxes are needed.  One possibility is that you have failed to develop a school district that is as efficient and effective the school districts that are currently at the top of the FCAT rankings.  The other possibility is that our city and county commissioners have failed to create an economy that provides enough jobs for high income, college educated workers.  After all, it’s their children who get the top scores.

But continuing the extra $100,000,000 in taxes drains our economy of productive resources and makes our community-development plans more difficult. Other districts that don’t have to pay it are gaining a competitive advantage over Sarasota.  Over a decade, the cumulative impact of draining this much money from our economy is huge.

In less than two years you will have another vote to extend the property tax for schools.  (It only provides about half of the extra $100,000,000 in taxes that you collect.)  I predict that you will fail unless you do two things.  First, you must develop a compensation system that rewards our many excellent teachers and eliminates the bad ones.  (Ever read RateMyTeachers.com?  We still have bad teachers.  My 7th grade son just got one of the worst ones at his school.  Why is Ms. Friedland still allowed to teach?)  Secondly, you must restore Sarasota’s high-school test scores to their rightful place at the top of all districts.  Unlike a decade ago when we were Number 2, with all your extra resources, we need to be Number 1.

Finally, with $100,000,000 more than the average of the other top districts, you don’t need more money.  You need a better plan.  Arne Duncan has said that schools need to do more with less.  I suggest you show your understanding of the new reality by voting down your proposed tax increase.

Best regards,

David Merrill
Arox Land Development, Inc
700 Bell Road
Sarasota, Fl  34240