Liberal Donor to Group Pushing Okla. Tax Hike Avoided Millions in Taxes

A liberal billionaire who funds a group pushing for increased taxes on new oil and gas wells in Oklahoma has a history of avoiding taxes himself.

George Kaiser, a Tulsa billionaire who was one of the biggest investors in failed Obama stimulus project Solyndra, is the top donor to a left-wing think tank that is leading the current effort to raise the oil and gas production tax in Oklahoma.

Democrats in Oklahoma are targeting energy companies as a means to cover the $878 million budget shortfall. House Democrats in the state have proposed legislation to increase the oil and gas production tax on new wells to seven percent, more than double the current rate of three percent.

Environmentalists, including the Oklahoma Sierra Club, have gotten behind the call for the increased taxes. If implemented, the tax increase could cost energy companies $500 million.

The Oklahoma Policy Institute (OPI), a Tulsa-based think tank, has campaigned for increased taxes on the oil and gas industry for years. The group recently released a video arguing for the increase and has urged individuals to call and pressure legislators to back the proposal.

Kaiser's foundation, the George Kaiser Family Foundation, is the largest donor to the Oklahoma Policy Institute. Kaiser's foundation has given $715,810 in donations to the think tank between 2008 and 2015, an amount nearly double as the second largest donor.

OPI has targeted companies for supposedly not paying enough in taxes.

OPI tweeted in April that Devon Energy, an Oklahoma City-based natural gas company, was not paying a high enough tax rate. "0.3% — Effective state corporate income tax rate paid by Devon Energy in from 2008 to 2015," the group wrote.

However, Kaiser, the think tank's largest contributor and personal advocate for higher oil and gas rates, is known to avoid the taxman.

In the late 1980s and early 1990s, Kaiser paid just $2,688 in federal income taxes and claimed negative income in six out of seven years, according to a 2005 report from the New York Times.

"When the I.R.S. sought $49 million in back taxes and penalties, he fought and wound up paying only $11,000 more," they wrote.

Kaiser set up a supporting organization for his charity in 1999 and stopped giving to the foundation. By "shuttling his money to the supporting organization" it allowed him to have a bigger tax break and "reduced the amount of excise taxes the foundation would have had to pay on the additional investment income," the Times wrote.

Kaiser also bought up failing oil and gas companies so he could deduct the operating loses on his taxes.

From 2000 to 2004, Kaiser put aside around $1 billion for charitable endeavors, which allowed him to deflect taxes on his own income. However, Kaiser sent only $3.4 million to charities. The rest was sitting in his supporting organization.

Kaiser's foundation found itself under investigation in 2005 by the Senate Finance Committee as part of an investigation on how wealthy families were using their nonprofits to "warehouse wealth while simultaneously earning themselves lucrative tax breaks."

The Sunlight Foundation reported in 2011 that Kaiser had amassed his fortune in part by "shrewdly playing the Internal Revenue Code."

"Kaiser has built his fortune in part through shrewdly playing the Internal Revenue Code," Sunlight wrote. "In one six year period, during which he increased his net worth enough to land him on the Forbes list of the 400 wealthiest Americans, Kaiser reported taxable income to the Internal Revenue Service just once, totaling $11,699—equivalent to a full-time hourly wage of $5.62."

Bloomberg reported that same year that some of the foundation's investments were based in overseas corporate tax havens, which allowed the entity to avoid U.S. corporate taxes.

Kaiser and his wife are major Democratic donors. They have contributed nearly $500,000 to Democratic candidates and committees throughout the years, according to data from the Center for Responsive Politics.

David Blatt, the executive director of the Oklahoma Policy Institute, said that they are grateful for their contributors when asked about Kaiser and his past actions.

"We are grateful for a broad base of generous and committed contributors whose support allows us to pursue an agenda of fiscal fairness and shared prosperity," Blatt told the Washington Free Beacon. "We strongly believe that ending unnecessary and unaffordable tax breaks to the oil and gas industry, as well as reversing tax cuts that have primarily benefited the wealthiest families and individuals and other reforms to modernize the tax system, are critical to achieving those goals."

Chad Warmington, the president of the Oklahoma Oil & Gas Association, said that if the proposed tax increase on oil and gas wells were to pass, it would be a disincentive for drilling dollars to continue.

"We've seen production numbers continue to come up, we've seen rig count continue to come up. All of those is based on that Oklahoma is a low tax and a fair regulatory state—it's a good place to drill."

Warmington said that an increase in the gross production tax could make rigs move to other states. He added that it is the "exact wrong time" to raise taxes on the rising industry.

Kaiser's foundation did not return requests for comment.

Posted in: Issues
Tags: Energy, Oklahoma, Tax Hikes, Taxes

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