Energy Taxes' Faustian Bargain

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By David Sirota (about the author) Page 2 of 2 page(s)

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"I had a lot of conversations with CEOs of the major gas and oil producers, and the conversations were singularly about the regulations, unless I brought up the severance tax," he said in an interview.

That said, oil and gas companies certainly see a mortal threat in severance tax proposals like the 2006 California ballot measure that would have used their revenues to potentially fund their demise. That's probably why the initiative provoked such a ferocious opposition campaign, financed with a whopping $93 million from energy companies. And the resounding defeat that resulted was designed not merely to stop that kind of proposal in the Golden State but also to send a message to other states that they better bargain on severance taxes, not fight.

In an age of money-dominated politics, that warning may, indeed, be valid - at least in the short term. The trick for severance tax reformers, then, will be to find ways of making deals with their enemies, while not making their enemies stronger in the process.

David Sirota is the best-selling author of the books "Hostile Takeover" (2006) and "The Uprising" (2008). To comment, e-mail Insight at forum@sfchronicle.com.

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This article appeared on page H - 9 of the San Francisco Chronicle
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