Roger Marks: The Problem with ACES
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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

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

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  • 1. Limitations on Upside Profit Potential underAlaska’s Oil and Gas Production Tax(“The Problem with ACES”)
    Roger Marks
    Presentation to Commonwealth North
    October 8, 2010
    1
  • 2. Tax Rate under ACES
    Base rate of 25% of net value (after deducting all costs)
    Progressivity element when net value per barrel exceeds $30/bbl:
    (Net value per barrel value - $30) X .004
    So if oil price is $80/bbl:
    Net value per barrel is about $55/bbl
    Progressivity = ($55 - $30) X .004 = 10%
    Total tax rate = 25% + 10% = 35%
    APPLIES TO ENTIRE NET VALUE
    2
  • 3. U.S. Tax Rate for Single Taxpayer
    First $8,350 10%
    Next $25,600 15%
    Next $48,300 25%
    Next $89,300 28%
    Next $201,400 33%
    Anything over $372,950 35%
    3
  • 4. 4
  • 5. 5
  • 6. 6
  • 7. 7
  • 8. 8
  • 9. International Competitiveness
    9
  • 10. 10
  • 11. 11
  • 12. 12
  • 13. Evaluating ACES
    13
  • 14. 14
  • 15. 15
  • 16. 16
  • 17. Possible Fix?
    17
  • 18. Fix?Bracketed Tax Rates
    HYPOTHETICAL EXAMPLE*
    $0/bbl - $30/bbl 25.0%
    Next $15/bbl ($30 - $45/bbl) 28.5%
    Next $15/bbl ($45 - $60/bbl) 32.0%
    Next $15/bbl ($60 - $75/bb l) 35.5%
    Next $15/bbl ($75 - $90/bbl) 39.0%
    Next $15/bbl ($90 - $105/bbl) 42.5%
    Next $15/bbl ($105 - $120/bbl) 46.0%
    Anything over $120/bbl 50.0%
    * 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.
    18
  • 19. 19