Pennsylvania Dems Push for Highest Natural Gas Tax in US

This week, the Pennsylvania House Democrats unveiled a new tax proposal, which would give Pennsylvania the highest severance tax in the nation–on top of current taxes.

Natural gas exploration has become a modern-day gold rush, spurring development across the United States. The Barnett Shale play in Texas, for example, is estimated to accounts for $8.2 billion in annual economic output and 83,823 jobs, and the Marcellus Shale formation–extending across New York, Pennsylvania, and West Virginia, has the potential to be even larger. Despite one of the worst recessions in years, this industry is growing, stimulating the economy, and creating high-paying jobs.

But some see this opportunity as a threat to the environments, and others merely want to tax natural gas drilling to fund special interests. A leading opponent is George Soros, a billionaire who is behind left-wing attacks on the free market. American Thinker reports that Soros has attempted to combine the forces of his MoveOn.org and the Working Families Party, based in New York, to oppose natural gas drilling. Soros’s stake in the alternative energy campaign is just one part of his plan to inhibit the burgeoning domestic natural gas industry.

Many environmental groups that want to see fossil fuels replaced with alternative energy strongly oppose the industry. New York has put a moratorium on drilling until more studies can be done. In Pennsylvania, politicians are using fears about environmental and social costs of drilling to pass a natural gas tax. However, natural gas companies in the state already are paying for both the costs of inspection and cleanup, and pumping millions into road and infrastructure improvement.

Pennsylvania House Democrats, along with Gov. Ed Rendell, see this economic activity as a new revenue source to balance the state budget, and fund a variety of special interest projects. The latest proposal would make the Commonwealth the most heavily-taxed natural gas producing state in the nation. Over 80% of the tax revenue would be used to balance the state budget, and only 6% would go to communities where drilling is occurring.

The severance tax simply takes money from the gas drillers — who are investing in local communities and rebuilding local infrastructure — and gives it to Harrisburg so legislators can dole out more pork.

Most other states rely on a natural gas tax to lower other taxes. Texas and Wyoming, the top natural gas producing states, have no corporate income tax and no personal income tax, whereas Pennsylvania already has the 11th highest in America. If politicians really want to get the economy back on tract they need to encourage development in the state instead of taxing it to death.

To get the facts about drilling in Pennsylvania, check out the Commonwealth Foundation’s new video series, Know the Drill: The Truth About Natural Gas, where we talk with residents in the heart of the northeast Pennsylvania shale gas boom to see what they have to say about drilling’s impact on the community, economy, environment, and the proposed severance tax.

[youtube Pu4ieo8WGXY]