Wolf Misleads on Need for More Taxes
Gov. Tom Wolf today proposed a new tax on natural gas, fulfilling one of his campaign promises. However, much of his rhetoric doesn’t match reality.
Wolf’s proposal calls for a 5 percent tax on the value of natural gas, with revenue (after replacing impact fee revenue) going largely to education, along with some environmental and energy programs.
Here are 5 facts Wolf got wrong or failed to address.
1) Pennsylvania education spending is at an all time high.
Despite Gov. Wolf’s refrain about Pennsylvania “disinvesting” in public education, state support for public schools is at an all-time high. In fact, total spending and revenues of school districts are also at record highs. So too are school districts’ reserve funds—and school districts added to their reserves during this so-called “disinvestment.”
2) Pennsylvania spends more than the national average on public education.
Pennsylvania’s public schools spend $3,000 more per student than the national average. Like others, Gov. Wolf talked about Pennsylvania’s “state share” of public education funding being low, as a percentage. But in reality, state funding for public schools per student is about the national average.
Yes, the funding formula for distributing dollars to schools is broken, and we look forward to working with Gov. Wolf to creating a fairer system of funding public schools. But the solution to what ails public schools isn’t a lack of funding. Indeed, if Gov. Wolf really wants to see “schools that teach,” he should advocate for more high performing charters schools in Philadelphia for students stuck on waiting lists or for much needed reforms in the York city school district.
3) Pennsylvania’s business taxes are already uncompetitive.
Gov. Wolf resorted to the tired refrain that “other states do it” in regards to a severance tax. Yet states like Texas do not have a corporate income tax or personal income tax, dramatically lowering the effective tax burden on those drillers.
Even states like West Virginia have a lower overall tax burden and a lower corporate income tax rate than Pennsylvania—which already pays the highest effective corporate income tax in the industrialized world.
Natural gas drilling has created thousands of jobs, expanded opportunity for small businesses and enriched landowners. And families across Pennsylvania—including low-income families in areas far removed from drilling—have benefited from lower energy bills thanks to the shale tax boom.
Tom Wolf’s tax proposal threatens this opportunity. The gas industry is already pulling out of Pennsylvania because of low gas prices and better opportunity elsewhere; Tom Wolf would drive them out even further.
As an MIT graduate and student of economics, Gov. Wolf should realize Pennsylvania is already losing in the competition for energy jobs.
4) Natural gas drillers pay many other taxes and fees.
In his eagerness to levy an additional tax on one of the rare bright spots in Pennsylvania’s economy, Gov. Wolf fails to mention what gas drillers already pay, almost pretending that they pay nothing.
Drillers have paid more than $2 billion in sales, corporate and personal income taxes since 2008; spent $500 million per year in road repairs; and paid more than $400 million in impact fees. On top of this, landowners—both families and local governments—have received billions in royalty payments.
5) Overspending is the problem, not undertaxing.
Announcing this tax in a county which has no natural gas wells speaks to the governor’s out-of-touch view on the issue.
Wolf’s proposal doesn’t represent a fresh start but is simply the latest in a long line of failed tax and spend schemes of the past. Unless we limit the unconstrained growth in state government spending, there will never be enough taxes.