It is not a windfall profit tax. In Alaska the natural resources are owned and managed by the state. With this being the case they should be managed in a similar manner to how a private owner would. (There is a slight deviation because employment and corporate income both matter to the State because they matter to the citizens. Though this matters for illustrative purposes it can be ignored when looking at the nature of the resource tax.) A private owner of the mineral rights would realize that the oil is a valuable resource and would charge some fee for the right to extract it. The fee, of course, would vary depending on the price of oil as the higher the price of oil, the greater price the owner could charge. By charging a royalty, the government behaves in the same manner. They give the returns from the sales of oil resources in the form of no income taxes and a rebate check.

Saying that this is a windfall tax goes against your premise that windfall taxes are a bad thing. Even if the prices adjusted fully to incorporate the costs of the taxation, the increase would only cost Alaskan citizens proportional to the amount they consume. They would roughly break even on instate consumption and would benefit for the royalties on any oil exported out of state. This is a policy that benefits the Alaskan population unambiguously.

Windfall profits are not a bad thing because they raise the prices of goods. In fact if levied correctly they don't. They are a bad thing because they send the message that the business atmosphere is not ideal. If profits are taken when they are too high, investments that are risky may be reconsidered. The result is less economic activity in all sectors. The danger here is that the costs are hidden and may not show up in analysis leading policy analysts to the wrong conclusion about the costs and benefits of a windfall profit tax.

Funny, I posted this thread before Palin became GOP VP. I still think windfall taxes are a bad thing, but Im not sure theres any other way you can do it at the state level. You have ot have some royalties.

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http://www.fairtax.org

Elminate all taxes on income and replace with a national sales tax.

perhaps because it is so economically isolated from the rest of the country? Hawaii has high gas prices, too.

ever consider it might have something to do with something other than windfall profits taxes.

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Anyone with a vision needs to see an eye doctor. -Helmut Schmidt.

"Mrs. Palin, which specific journals and news sources do you read? (after being asked once)"

"Oh, All of them!"

If you think the market is functioning well, you can auction off rights to the oil reserves and invest the proceeds. If you think the market is functioning well then this would reduce the venerability to oil price fluctuations.