PA Independent Fiscal Office: Wolf Severance Tax Highest in U.S.

Pennsylvania’s Independent Fiscal Office (IFO) provides revenue projections for use in the state budget process along with impartial and timely analysis of fiscal, economic and budgetary issues to assist Commonwealth residents and the General Assembly in their evaluation of policy decisions. It’s only been around since 2010 and in the past we’ve wondered if it’s populated with liberal Democrats that don’t hew to the state mission of being objective in their analysis. However, our confidence in the organization has grown over the past year or so. Recent IPO predictions about Marcellus Shale impact fee revenues have been pretty accurate (see PA Independent Fiscal Office Predicts Impact Fee Revenue for 2016). And the IPO’s assessment of PA Gov. Wolf’s proposed severance tax last year was not flattering (see IFO: PA Gov. Wolf Proposes Highest Severance Tax in Nation). The IFO is back with another look at Wolf’s proposed budget, including his insistence on including a so-called 6.5% severance tax. The IFO points out in real terms, Wolf’s proposal is actually a 9% severance tax–the highest in the country! The IFO also points out a fact that few Democrats will admit in public–most of the tax will be paid by landowners (coming out of their royalty checks), and consumers using the natural gas extracted. The IFO says it’s a known fact that companies pass along taxes in higher costs to their customers (and in deductions from royalties). So while some poor, demented fools think they’re “soaking big, filthy, rich oil companies” and “making them pay their fair share” by implementing a severance tax, just the opposite happens. The little guy gets screwed. What ends of up happening is that money is taken from one little guy’s pocket and given to another little guy. It’s a con game, a shell game, and it’s time to put an end to it…

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