Natural Gas NOW
How many times have we heard Pennsylvania is the only state without a severance tax? The truth is that it has a 6.9% Marcellus Shale tax.
Last month the phony “Multi-State Shale Research Collaborative” gave Pennsylvania an “F” for not imposing a big enough shale tax. The “Collaborative” is but a fractivist-funded public employee union scam, as I noted here and here. It attacks shale to get a bigger shale tax to pay unaffordable public employee benefits. They provided some of the lies and statistics used by Tom Wolf to run his failed severance tax campaign. Now, they’re panning Pennsylvania and lauding West Virginia saying the latter’s 5% severance tax is the way to go. It turns out, though, Pennsylvania already has a Marcellus Shale tax with an effective rate of 6.9%.
The reality behind the current propaganda campaign is revealed in the spokesperson for the Collaborative. She is the one and only Jan Jarrett, a William Penn Foundation shills at PennFuture and defender of John Quigley. She’s still well connected and has a gig with Pennsylvania Budget and Policy Center, a member of the Collaborative. She also consults with the William Penn Foundation. It’s one big cabal of fractivists at work again.
The recent report, we’re told, says “West Virginia earned an A on its Report Card for having an effective severance tax but Pennsylvania and Ohio both got Ds.”
If we go to the report itself and the Appendix, we find the supposed reason why:
West Virginia the table says has a 5% shale tax, which yields a 4.5% effective tax rate after adjustments for credits and the like. Pennsylvania’s tax, which is in the form of Marcellus Shale “impact fee” with a large base figure only yields, the Collaborative asserts, an effective tax rate of 2.3%.
There’s just one problem and it’s a big one; the 2.3% is completely wrong. The report is dated June, 2016 but here’s what it says in the fine print of the footnotes:
For Pennsylvania, the state’s per-well impact fee is counted as a severance tax and the average shown is only for the two-year period from 2012-13 in which that tax was in effect; these were years of relatively low prices and therefore of relatively high effective tax rates for Pennsylvania under it’s per well impact fee.
What? Yes, the report uses 3-4 year old data. It asserts that was a period of unusually low prices and unusually high effective tax rates. They imply, in other words, the effective tax rate would be normally be much lower than 2.3%. This is deceit of the worst sort. The current prices are, in fact, lower. The effective tax rate is now literally three times what Jan Jarrett and her fractivist/public employee union buddies assert.
The proof is in a report prepared by the Commonwealth’s Independent Fiscal Office, which has hardly been one to exaggerate the benefits of Pennsylvania’s shale tax. This report offers the following:
Notice the 2015 effective tax rate was 6.9%. That equals another 2.4% effective tax rate above the West Virginia effective tax rate as estimated by the Collaborative. It’s more than half again the West Virginia rate. The difference, in fact, is also more than the 2.3% total effective tax rate for which the Collaborative gave Pennsylvania credit in 2012-13. Furthermore, notice it didn’t even get that number correct, the real effective tax rate for that period being between 2.7% and 5.1%. The average over five years has been 3.7%, a bit below West Virginia, but the latter’s corporate income tax is only about half Pennsylvania’s.
All in all, what we see is a very effective shale tax already in effect in Pennsylvania. It is one that yields as much or more than what Tom Wolf would have us believe he wants. What Wolf and the public employee unions don’t like is that the money doesn’t go into their dirty hands but, rather, back to the communities actually impacted as well as other municipalities and worthy projects. Wolf, Jan Jarrett and friends want that money to spend on bloated public employee pensions and politically correct renewables that will feather all their own nests. Let’s not let them get away with it. They haven’t yet, despite some intense demagoguery and some lying that ought to embarrass them.