This page was last updated on September 15, 2011.
Doing as others do; Editorial; Beaver County Times; September 14, 2011.
This is at least the second “Doing as others do” editorial on this topic.
Below is a critique of the subject editorial.
“Pennsylvania is sitting on a modern-day gold mine.
“Yet by failing to tax natural gas extraction from the Marcellus Shale, it’s squandering a valuable revenue asset.
“At a conference sponsored by the natural gas drilling industry last week, former Gov. Ed Rendell urged drilling firms to push his successor, Tom Corbett, to enact a tax on extraction.”
[RWC] As I’ve written previously (here and here), while I’m not unalterably opposed to such a tax within limits, it doesn’t represent “found” or “free” money. For example, why should a tax on Marcellus gas go for anything other than covering regulatory costs? Anything else creates a slush fund for politicians to spend as is/was the case for Medicare and Socialist Security taxes. There’s a reason why the editorial doesn’t mention offsetting severance tax revenue with tax rate cuts elsewhere. You may recall the BCT opposed/opposes using new revenue from gambling taxes to cut property taxes. Instead, the BCT wants to use any new tax to increase already excessive spending.
“To a degree, he was preaching to the choir. Some drilling companies, mostly the major ones, have said they expect to pay some sort of tax. It’s the level of taxation, not the tax, that interests them.
“It’s not as if an extraction tax would put Pennsylvania at a competitive disadvantage. Our commonwealth is the only major natural gas producing state that doesn’t impose a tax on drillers.”
[RWC] This paragraph may be true when we speak about a severance tax in isolation and ignore all other PA taxes, but what about PA’s overall tax environment?
Let’s look at the following info from the Tax Foundation (TF), a source often cited by the BCT. In “State-Local Tax Burdens,” PA ranks (smaller ranking is worse) 10th (10.1%). In “Tax Freedom Day by State, 2011,” PA ranks (smaller ranking is worse) 11th [April 13th (103 days)]. In “2011 State Business Tax Climate Index,” PA ranks (smaller ranking is better) 26th. If you want to put a “positive” spin on this, PA is #1 in the bottom half. If we were addressing the Steelers, would we consider finishing 17th out of 32 teams (the equivalent of 26th out of 50 states) at the end of the season a good situation? According to the Tax Foundation in 2010, “If Pennsylvania were its own country, it would have the highest overall corporate tax rate in the world at 41.5% (federal plus state, accounting for the state-local deduction).”
The bottom line is, adding a severance tax without offsetting tax rate cuts elsewhere would “put Pennsylvania at a [further] competitive disadvantage.”
“Although revenue estimates range all over the place, in large part because of the number of tax proposals that are out there, it’s safe to say that Pennsylvania is forgoing hundreds of millions of dollars in new revenue, not just now but for years to come.”
[RWC] In “Money matters” (3/20/11), the BCT said “Estimates are that an extraction tax could produce $200 million or more in new revenue for the state.”
“Sure, a natural gas extraction tax would be passed along to consumers, but the added cost wouldn’t be borne solely by Pennsylvania residents.
“Users in other states would be putting money into the state’s treasury, too. Basically, the commonwealth would be using other people’s money to help pay for state services.”
[RWC] So it’s OK to jack up spending when it’s “other people’s money?” My parents taught me to be careful with my money (as they and their parents were with their money), and even more careful with “other people’s money.” Apparently the BCT and far too many of us didn’t learn that lesson. The idea we’re spending someone else’s money is one of the reasons government spends too much. It goes along with the “if we don’t spend it someone else will” argument I heard several years in support of the new Fallston (Veteran’s Memorial) bridge and the proposed new Aliquippa/Ambridge bridge.
“That’s not being unfair. After all, they’re doing it to us. Using gasoline that comes from oil in Texas? You’re funding services in the Lone Star State. Using electricity produced by power plants that are fueled by natural gas or coal from other states? You’re paying taxes to those states, too.”
[RWC] FYI, Texas has no state income tax and is a right-to-work state. Why isn’t the BCT using the “doing as others do” argument to support those policies in PA? In my critique of the editorial “Texas and taxes,” you will find a comparison of the PA and TX tax climates.
“Yet for some reason, Pennsylvania’s politicians won’t take advantage of the situation, even though their counterparts across the country are more than willing to exploit the situation to lessen their own tax burdens.”
[RWC] This sentence says PA political “counterparts across the country are more than willing to exploit the situation to lessen their own tax burdens,” but where in this editorial did the BCT propose using severance tax revenue to reduce the PA tax burden? Besides, don’t lefties tell us paying taxes is a privilege, not a burden? As noted above, the BCT has a record of opposing the use of new taxes to offset existing taxes.
“Outsiders are taking us for suckers — and we’re letting them.”
[RWC] What happened to “Do unto others what you would have others do unto you?” Oops, for a second I forgot about whom I was writing.
If someone proposed eliminating the state income tax, making PA a right-to-work state, et cetera, does anyone care to guess how the BCT would treat the validity of the “do as others do” argument?
© 2004-2011 Robert W. Cox, all rights reserved.