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 José 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