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Why This Oil Billionaire Wants to Pay Higher Taxes
America's oil and natural gas boom may be bad news for the climate, but it should be good news for state treasuries. As the drilling grows, lots of wealth is being created in different parts of the country, and if government can shave off even a tiny slice of that bounty and spend it on public goods, the legacy will be felt for decades to come.
For example, if Oklahoma could steer more of its new oil wealth into investments in education and infrastructure, the state will strengthen two core foundations for long-term prosperity -- which will come in handy when the oil runs out, as it inevitably will.
More money is especially needed for higher education, given that state spending in this crucial area has fallen by 21 percent since 2008, as measured per-student. While many states have started reversing the steep cuts made during the recession with big higher ed increases, Oklahoma isn't one of them, despite all the new oil money sloshing around. Budgets for public universities only barely increased last year.
Contrast that stinginess with what's happening in North Dakota, which has pumped some of its fracking riches into huge new investments in higher ed.
North Dakota is thinking ahead. Oklahoma is not.
Enter George Kaiser, an oil man worth nearly $10 billion and an unlikely proponent of bigger government. Kaiser wants to end a special tax break in Oklahoma that oil companies now get on new wells for four years, saying his company doesn't need that incentive to drill -- not when business is booming. Kaiser wants the tax on new wells to be the same as existing ones, which is 7 percent. And he wants the state to take the money raised and invest it in education and infrastructure.
The case for more spending on education in Oklahoma is obvious enough: one national study recently ranked Oklahoma 41st in education achievement and 44th in financing. Near the bottom of the ed pack is not where any state wants to be in the Information Age, especially if it can afford otherwise. We're not talking about Mississippi here. We're talking about the fifth largest producer of oil of any U.S. state.
The case for investing more in Oklahoma's infrastructure is equally compelling. In 2013, the American Society of Civil Engineers gave Oklahoma's infrastructure a C-, and noted that 70 percent of the state's roads were in poor or mediocre condition, and nearly a quarter of its bridges were structurally deficient. The state also faces high spending needs -- like, in the billions -- for stuff such as waterworks.
These big infrastructure investments, like new spending on education, aren't going to happen down the line when the oil boom ends. The time to take care of the big ticket items is when the money is rolling in. George Kaiser gets that, but then we should point out that he's not your usual oil man: He's a philanthropist who's already given big for early childhood education in Oklahoma, as is nicely described here. Indeed, it was partly because of Kaiser's efforts and money that Oklahoma became a model for other states on the pre-K issue.
Let's hope that Kaiser can again push Oklahoma to the cutting edge.
