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By Robert Rapier on Oct 30, 2006 with no responses

What is it about Silicon Valley executives?

Tags: critics, Prop 87

Over the weekend, I had an essay posted at VentureBeat on California’s Proposition 87:

Prop 87: Deceptively marketed

Most of you know that Vinod Khosla and I have butted heads on a few issues, but now Silicon Valley executive Bill Jolitz threw in his $0.02:

How naive. Do the research. California is the only oil producing state that DOESN’T tax oil companies for pumping the stuff out of the ground or beneath the water!

Why can’t we do a tax like Louisiana or Texas or Alaska, and put it to good use. How ironic that California is more conservative on taxes than Louisiana, Texas, and Alaska.

Oil isn’t forever – why don’t we start thinking about our kids for once?

A question for any readers from California: Is the average California voter this misinformed, or is this limited to the average Silicon Valley executive? My response to Bill is below.


I have done the research, Bill. It would appear that you are the one being naïve. In fact, I specifically discussed the tax situation in this essay. Did you read it before commenting? I have gone into more detail on the tax situation in this essay on my blog. What you have done is take a single tax, out of many, and used that to declare that “California is more conservative on taxes than Louisiana, Texas, and Alaska.” Sorry, but that’s just not correct. Here is what three of your own newspapers – of the many who have endorsed a “No” vote on 87 – have written about the tax issue.

From an Oakland Tribune editorial on 10-25-06:

Right now, California’s tax rate for oil is in about the middle among oil-producing states. The new tax proposed by Proposition 87 could make our tax the highest in the nation and force some smaller oil companies to cap their wells, reducing the 630,000 barrels a day we produce.

From a San Francisco Chronicle editorial on 10-9-06:

The seemingly nonstop succession of pro-87 television ads presents the measure as a matter of fairness: Unlike most oil-producing states, California does not impose a severance tax on the extraction of oil. The claim is accurate, but missing context. The tax burden on oil producers here in this state is comparable to others when income, property, sales and other taxes are added.

How about the L.A. Times on 9-26-06:

Proposition 87′s backers are equally disingenuous in suggesting that oil companies are getting a free ride in California, given the absence of an extraction tax. Oil companies are hardly undertaxed here; most states that have extraction taxes don’t charge California’s steep corporate income taxes.

Furthermore, your statement that California is not the only oil-producing state without an extraction tax is also incorrect. It seems you have been sipping the Kool-Aid, and failing to do your own research.

About the only thing you did get correct was your statement that oil won’t last forever. That’s true, which is why I have spent many years (and continue to do so) working on and promoting alternatives. You read that part too, right? Or did you simply read the title, and decide to grace us all with your wisdom? Again, I am not suggesting that voters should vote no, but they should certainly be more informed that you seem to be.


Robert Rapier