A Severance Tax “Like Other States”? Not so fast
Gov. Tom Wolf and special interest groups continue to insist Pennsylvania needs to enact a severance tax because “other states have one.” This, of course, ignores the fact that Pennsylvania has an “impact fee”—which functions like a tax and has generated more than $800 million since 2011. It also ignores that Pennsylvania drillers pay all the taxes common to every other business, more than $300 million since 2009.
As we’ve pointed out, lawmakers need to consider the overall tax burden when comparing Pennsylvania to other states.
So, how does Pennsylvania stack up to states with severance taxes?
According to Census data, 11 states collected more than $200 million in total severance taxes in 2014. Pennsylvania would be the 12th state, if our “impact fee”—which generates more than $200 million every year—were counted.
Of those 11 states:
- 3 have no individual income tax
- 2 have no corporate income tax
- 5 have no death tax
- 2 have no general sales tax
The visualization seen below—or click here to view in your browser—shows that if lawmakers want Pennsylvania to “be like other states,” especially energy producing states, we should cut or eliminate other state taxes.