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# Roger Marks: The Problem with ACES

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Roger Marks presents "the problem with ACES." Alaska's oil and gas policy

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### Roger Marks: The Problem with ACES

1. 1. Limitations on Upside Profit Potential underAlaska’s Oil and Gas Production Tax(“The Problem with ACES”)<br />Roger Marks<br />Presentation to Commonwealth North<br />October 8, 2010<br />1<br />
2. 2. Tax Rate under ACES<br />Base rate of 25% of net value (after deducting all costs)<br />Progressivity element when net value per barrel exceeds \$30/bbl:<br />(Net value per barrel value - \$30) X .004<br />So if oil price is \$80/bbl:<br />Net value per barrel is about \$55/bbl<br />Progressivity = (\$55 - \$30) X .004 = 10%<br />Total tax rate = 25% + 10% = 35%<br />APPLIES TO ENTIRE NET VALUE<br />2<br />
3. 3. U.S. Tax Rate for Single Taxpayer<br />First \$8,350 10%<br />Next \$25,600 15%<br />Next \$48,300 25%<br />Next \$89,300 28%<br />Next \$201,400 33%<br />Anything over \$372,950 35%<br />3<br />
4. 4. 4<br />
5. 5. 5<br />
6. 6. 6<br />
7. 7. 7<br />
8. 8. 8<br />
9. 9. International Competitiveness<br />9<br />
10. 10. 10<br />
11. 11. 11<br />
12. 12. 12<br />
13. 13. Evaluating ACES<br />13<br />
14. 14. 14<br />
15. 15. 15<br />
16. 16. 16<br />
17. 17. Possible Fix?<br />17<br />
18. 18. Fix?Bracketed Tax Rates<br />HYPOTHETICAL EXAMPLE*<br />\$0/bbl - \$30/bbl 25.0%<br />Next \$15/bbl (\$30 - \$45/bbl) 28.5% <br />Next \$15/bbl (\$45 - \$60/bbl) 32.0%<br />Next \$15/bbl (\$60 - \$75/bb l) 35.5%<br />Next \$15/bbl (\$75 - \$90/bbl) 39.0%<br />Next \$15/bbl (\$90 - \$105/bbl) 42.5%<br />Next \$15/bbl (\$105 - \$120/bbl) 46.0%<br />Anything over \$120/bbl 50.0%<br />* This example is only illustrative of a bracketed tax structure. The actual brackets and rates need to be designed very carefully and this by no means represents a proposal for suggested brackets and rates. <br />18<br />
19. 19. 19<br />
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