Gov. Wolf has proposed a severance tax on the extraction of natural gas in Pennsylvania to provide funding for public schools. Lawmakers in both parties have introduced severance tax bills every year since 2009, and every year the gas drillers have successfully fought the tax, spending $46.8 million on lobbying since 2007. Much of the industry’s lobbying money has gone into manufacturing a narrative, built on a foundation of myths, about the economic benefits of drilling and the fragility of the industry.
The Pennsylvania Budget and Policy Center has compiled five facts, supported by research and independent data, which tell the real story. For the next five days we will post a fact a day on this blog. Today, we give you:
Fact 1. Oil and gas development companies often pay little to no corporate income tax in Pennsylvania due to federal energy development tax incentives. Gas drillers pay less now in state income taxes than they did in 2008 at the beginning of the boom. And even as production soars, the drillers are paying slightly less in impact fees.
- Range Resources, the No. 3 PA producer, says it is “currently not in a taxpaying-position for federal income taxes,” and admits “we generally do not pay significant state income taxes.”
- Cabot Oil and Gas, the No. 2 PA producer, reports it paid no state income taxes in 2014.
- Chesapeake Energy, the No. 1 PA producer, paid a combined federal and state effective income tax rate of only 1.5% in 2014.
- Combined, these three companies reported more than $4 billion in net income in 2014.