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Letter


An Open Letter to Colorado Residents: Amendment 58 Will Raise Energy Prices

September 30, 2008

If enacted, Amendment 58 on Colorado's November ballot will have substantial negative consequences for the state and its citizens. By raising taxes on oil and natural gas production, the initiative would have the effect of raising energy prices on consumers and discouraging growth in Colorado's economy.

Colorado is an energy-rich state, particularly when it comes to natural gas. This should be a time of expansion and investment in the state's energy infrastructure, yielding benefits for all Coloradans through more plentiful energy and quality jobs. Amendment 58 threatens these desirable developments by resorting to a vengeful tax hike.

The initiative's supporters seem to suggest that this punitive tax will somehow redress record profits of oil and gas companies, but the ultimate effect of Amendment 58 is to double the tax rate on oil and gas production in Colorado. According to one study, Amendment 58 would cause Colorado's oil and natural gas projects to suffer the second-highest production tax burden among top energy-producing states. In their quest to extract money from oil and natural gas companies, initiative sponsors are ensuring higher prices for the energy Coloradans need.

Taxing an activity, by its nature, generally decreases that activity. If history is any lesson, enacting Amendment 58 would cause state production of oil and natural gas to decrease, meaning imports will have to make up the difference. Just as important, this tax hike would discourage new investments in oil and natural gas production.

Despite claims to the contrary, the burden of any tax falls squarely on the shoulders of consumers, workers, and shareholders such as retirees or mutual fund investors. We can safely predict that this measure will cause reduced state oil and gas production, fewer economic opportunities, increased reliance on imports, and higher energy prices.

If Colorado policymakers want to pursue a sound energy policy, they ought to keep taxes low and reduce government interference in the markets that are capable of delivering innovative energy solutions to consumers. Attempts to punish successful industries and redirect money to programs favored by politicians have failed to solve our energy problems in the past, and there's no reason to think this effort will be any different.

Sincerely,*

A. Paul Ballantyne
University of Colorado at Colorado Springs

Arthur A. Fleischer III
Metropolitan State College of Denver

Barry W. Poulson
University of Colorado at Boulder

W. James Smith**
University of Colorado at Denver

Michael E. Williams
University of Denver

Donald L. Alexander**
Western Michigan University

Howard Baetjer, Jr.
Towson University

Wendy C. Bailey
Troy University

Charles W. Baird**
California State University -- East Bay

Timothy R. Bastian
Creighton University

Samuel Bostaph
University of Dallas

Scott C. Bradford
Brigham Young University

H. Sterling Burnett
National Center for Policy Analysis

William N. Butos
Trinity College

Noel D. Campbell**
University of Central Arkansas

Roy E. Cordato
John Locke Foundation

Mike Cosgrove
The Econoclast

Jim F. Couch**
University of North Alabama

Nicole V. Crain
Lafayette College

Antony Davies**
Duquesne University

A. Edward Day
University of Central Florida

Joseph S. DeSalvo
University of South Florida

Isaac DiIanni**
Northeastern State University

Jeffrey H. Dorfman
University of Georgia

Floyd H. Duncan**
Virginia Military Institute

James R. Edwards
Montana State University -- Northern

Bert Ely
Ely & Company, Inc.

Richard E. Ericson
East Carolina University

Frank Falero
California State University -- Bakersfield

W. Ken Farr
Georgia College & State University

John A. Flanders
Central Methodist University

Michelle Michot Foss
University of Texas at Austin

Dave Garthoff
University of Akron

Gabriel Gasave**
The Independent Institute

Robert Genetski
Classicalprinciples.com

Paul J. Gessing
Rio Grande Foundation

Joseph A. Giacalone**
St. John's University

Micha Gisser
Rio Grande Foundation

Rodolfo A. Gonzalez
San Josè State University

J. Edward Graham
University of North Carolina -- Wilmington

Wendy Gramm
Former Chairwoman
Commodity Futures Trading Commission

John D. Grether
Northwood University -- Michigan Campus

J. Daniel Hammond
Wake Forest University

Reza G. Hamzaee
Missouri Western State University

Charles L. Hooper
Hoover Institution

Joseph M. Jadlow
Oklahoma State University

Marianne Jennings
Arizona State University

James L. Johnston**
The Heartland Institute

Raymond J. Keating
Small Business & Entrepreneurship Council

David N. Laband
Auburn University

William E. Laird
Florida State University

Daniel L. Landau
University of Connecticut -- Waterbury

George Langelett
South Dakota State University

Stan Liebowitz
University of Texas at Dallas

Dennis Logue
Dartmouth College

Herbert London
Hudson Institute

Lawrence W. Lovik
Alabama Policy Institute

D.W. MacKenzie
The Coast Guard Academy

Yuri N. Maltsev
Carthage College

Henry G. Manne**
George Mason University

Deryl W. Martin
Tennessee Technological University

Roger E. Meiners
University of Texas at Arlington

John Merrifield
University of Texas at San Antonio

Michael C. Munger
Duke University

Richard F. Muth
Emory University

James B. O'Neill**
University of Delaware

Evan Osborne
Wright State University

H. Edwin Overcast
Black & Veatch

Karen Y. Palasek
John Locke Foundation

Douglas Patterson
Virginia Polytechnic Institute and State University

Judd W. Patton
Bellevue University

Pedro V. Piffaut**
Columbia University

Richard W. Rahn
Institute for Global Economic Growth

R. David Ranson
H.C. Wainwright & Co. Economics, Inc.

Richard Rawlins
Missouri Southern State University

George Reisman
Pepperdine University

Antonio L. Rosado
Puerto Rico Economists Association

John Ruggiero
University of Dayton

Thomas Rustici
George Mason University

John Rutledge
Rutledge Capital, LLC

Thomas R. Saving
Texas A&M University

Paul Schoofs
Ripon College

Mike Schuyler
Institute for Research on the Economics of Taxation

Larry J. Sechrest
Sul Ross State University

Howard Segermark
American Family Business Institute

Richard T. Selden
University of Virginia

Alan C. Shapiro
University of Southern California

William F. Shughart II
University of Mississippi

Neil T. Skaggs
Illinois State University

Neil Snyder
University of Virginia

John C. Soper**
John Carroll University

Craig A. Stephenson
Babson College

David M. Switzer
St. Cloud State University

Robert Tamura
Clemson University

Teresa Tharp
Valencia Community College

Alex Tokarev
The King's College

Leo Troy
Rutgers University -- Newark

Charles D. Van Eaton**
Bryan College

Richard K. Vedder
Ohio University

John H. Wicks
University of Montana

Wayne H. Winegarden
Arduin, Laffer & Moore Econometrics

Gary Wolfram
Hillsdale College

Mike Wohlgenant**
North Carolina State University

Thomas Wyrick
Missouri State University

Bill Yang
Georgia Southern University

John S. Zdanowicz
Florida International University

Benjamin Zycher
Manhattan Institute for Policy Research

* Affiliations listed for identification purposes only.

** Signature added after September 30, 2008