President Obama's budget proposal this week is likely to seek an end to federal tax breaks for oil and gas companies, attempting to revive a bid that died in Congress last year. Meanwhile, with much more rigor, Alaska is heading in the opposite direction.

Alaska's State House is working on a bill already passed by the Senate that would overturn the state's progressive oil tax structure, which increases the taxes oil companies pay as the price of oil rises. Supporters of the overhaul bill, which was written by Republican Governor Sean Parnell, say the tax break will help boost dwindling oil production in Alaska, which was overtaken by North Dakota last year as the number two oil-producing state. (See related: "Pictures: Bakken Shale Oil Boom Transforms North Dakota," and "The New Oil Landscape.") Texas produces by far the most oil in the United States.

Critics of the Alaska bill, however, say the move marks the end of a taxation scheme that has filled state coffers while much of the rest of the United States struggled through the recession. And they worry the break will do little to spur oil production.