Day: June 16, 2017

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A Severance Tax: The Basics

  By PA Budget and Policy Center, PBPC Blog posts, Severance Tax, Taxation

Pennsylvania has been considering a severance tax on natural gas for years. Here are four reasons it is long overdue: TALKING POINT #1: A severance tax can bring in substantial and, as natural gas prices rise, growing revenues to help close our budget and investment deficits now and in the future. Governor Wolf’s proposal is projected to bring in $349 million next year, $712 million in 2018-2019 and $1.15 billion a year by 2021-22. (These are net revenues after deducting a credit for the impact fee already paid by natural gas drillers.) Even a tax at slightly lower levels brings in over $200 million next year and close to a billion dollars a year 2021-2022. TALKING POINT #2: Oil and gas development companies pay comparatively little in state taxes now. Even though gas production has increased from 4,070 billion cubic feet in 2004 to 5,096 in 2016, total revenue from… Continue reading

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What Is the Fair Share Tax?

  By Fair Share Tax, PA Budget and Policy Center, PBPC Blog posts, Taxation

The main reason that Pennsylvania’s tax system is so upside down — with the top 1% paying only 4.3% of their income in taxes while the middle 20% pays 10% — is that the Pennsylvania Constitution prohibits us from enacting a graduated personal income tax. Sales and property taxes tend to take a higher percentage of the income of taxpayers at the bottom and in the middle than at the top. But graduated income taxes in many states — including all of our neighbors — compensate by taxing those at the top at a higher rate. We can start to fix our broken tax system by adopting what we call a Fair Share Tax which has been introduced by Senators Costa, Hughes, and Haywood as SB555.  Here are the key elements of it: The Personal Income Tax which is currently set at 3.07% will be divided into two taxes. The… Continue reading