Yesterday, John Micek reported that Newt Gingrich expressed support for a natural gas severance tax in Pennsylvania, writing, “even Mr. Republican Revolution his ownself thinks the state should have a tax on natural gas driller.”
This seemed odd—being as Newt’s speech was on job creation and energy development, and natural gas drilling is not only part of energy development, but one of the only sectors of Pennsylvania’s economy adding jobs—so I followed up with Newt Gingrich’s organization, American Solutions. They were kind enough to pass along the following note, which they had originally sent to Mr. Capitol Ideas, outlining Gingrich’s opposition to new energy taxes.
To be clear, Gingrich did not call for increasing taxes on energy production. As you reported, he called for an “appropriate” tax regime that would expand domestic energy production and reduce the need for foreign sources of energy. This of course requires reducing the tax burden on energy companies, not increasing it with a new severance tax.
Gas producers in Pennsylvania are already subject to numerous taxes and fees, including a massive federal corporate tax rate that ranks only behind Japan’s as the highest in the world. The appropriate tax policy, as Gingrich has argued repeatedly, would be to match Ireland’s corporate rate of 12.5% and reduce the capital gains tax to zero to match the Chinese. That policy also includes no new taxes that would discourage American energy production, as a severance tax on natural gas would do.
Natural gas production in Pennsylvania will be crucial, not only for creating much-needed jobs in the Commonwealth but also for the broader U.S. economy as we develop a responsible energy policy. Speaker Gingrich and American Solutions recognize the importance of tapping into America’s vast natural gas resources, including those in the Marcellus formation, which experts have rightly called a “game changer” in terms of our capacity to produce more affordable and reliable American energy.
In fact, earlier this summer American Solutions was one of the first organizations to call for protecting natural gas production in Pennsylvania by highlighting the costly language related to hydraulic fracturing included in legislation to address the BP oil spill: http://www.americansolutions.com/energytax/2010/07/the-trojan-horse-spill-bill.php
More than 230,000 Americans have signed American Solutions’ “Stop the Energy Tax” petition, and we will continue to fight against any efforts at the local, state, or national level to increase the cost of energy through new taxes, including the proposed severance tax on natural gas in Pennsylvania.
For more on why Newt is right, and Pennsylvania doesn’t need a severance tax on top of current business taxes, check out our Natural Gas Facts and Myths, and our video series, Know the the Drill: The Truth About Natural Gas.