Why Do We Need a Severance Tax?

Proponents of a natural gas severance tax have been offering several arguments supporting a tax, here are the three main talking points used by tax advocates:

1) Higher taxes will save the environment. It doesn’t matter that the tax revenue would not be spent on programs in any way related to natural gas drilling, or that taking money from drilling companies results in them having less to spend — including on safety measures. Gas companies are evil and taxing them must therefore be good for the environment.

2) Government should always tax the rich. Regardless of how the money is spent, natural gas companies are rich. They have money, and therefore we should take it from them. Wanting to keep your earnings is greedy, but taking other people’s money to spread around is charitable. Money is always better spent in the hands of the government.

3) There are numerous special interests that want a piece of the money. As Gov. Rendell points out, the hardest part of the negotiation is how to distribute the funds among the myriad of special interests demanding their share (some of which are identified here).