CORPORATE CLOSE-UP: WILL OIL-DEPENDENT STATES DRILL INTO CORPORATE TAX CODES FOR NEW REVENUE?

Oil Dependent States

 

Plummeting oil prices are exacting a hefty toll on states that are heavily dependent on severance taxes, according to a recent report by the Nelson A. Rockefeller Institute of Government. Will these jurisdictions’ search for new sources of revenue lead them to eye significant corporate tax code changes? Probably not, a principal of a state legislative monitoring firm says.

Seven of the eight states hardest hit by low oil prices impose a corporate income tax. These states are Alaska, Louisiana, Oklahoma, New Mexico, North Dakota, Texas and West Virginia. Each of these jurisdictions rely on severance taxes for 16 percent of their total tax revenues, as opposed to 0.2 percent for the rest of the states, the report notes. Hardest hit is Alaska, with severance tax revenues down by 87.9 percent and total tax revenues down by 67.2 percent.

But so far, two of the poster-child oil states that are scrambling for new revenues (Oklahoma and Louisiana) do not appear to be eyeing hikes to their corporate tax rates, Joseph R. Crosby, principal with MultiState Associates told Bloomberg BNA Feb. 8.

Louisiana’s “Governor Edwards did include NOL changes in his agenda for the special session,” Crosby said. “But that's not nearly on the scale of a full rate increase. Both Louisiana and Oklahoma are really pushing for sales tax base expansion as a means of achieving fiscal solvency,” Crosby noted. 

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Do you think low oil prices will spill over into state corporate tax codes?

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