Republican Lawmaker Supports 4.9% Severance Tax. Time for Dems to Raise the Bar.

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Allyson Schwartz supports a middle-of-the-road 5% severance tax, and now Republican Rep. Gene DiGirolamo is one-downing her with a 4.9% severance tax proposal

When Republicans start signing onto a severance tax, that’s how you know we’ve succeeded in moving the Overton Window on this issue to the left.

Since the Marcellus Shale politics really started ramping up around 2007, the range of political positions embraced by politicians and the largest environmental advocacy organizations has looked something like this (in bold):

Ban Fracking
Moratorium on Fracking
Severance Tax on Fracking + Strong Drilling Regulations
Impact Fee on Fracking + Weak Drilling Regulations
No Fracking Tax + Weak Drilling Regulations
No Fracking Tax + No Drilling Regulations

The reason I greatly appreciate the moratorium supporters even though I don’t really agree with them is that, just by talking about banning fracking or placing a moratorium on the practice, they’ve pulled the Overton Window to the left. Now the range of accepted political positions among the major players looks more like this:

Ban Fracking
Moratorium on Fracking
Severance Tax on Fracking + Strong Drilling Regulations
Impact Fee on Fracking + Weak Drilling Regulations
No Fracking Tax + Weak Drilling Regulations
No Fracking Tax + No Drilling Regulations

Support for a 5% severance tax is now in the dead center of the political spectrum on this issue. That’s a pretty weak severance tax – basically in the middle of the pack of the states, which is pathetic for the Saudi Arabia of natural gas – but it is now fully consistent with membership in the bipartisan center.

Now that a Republican supports 5%, can we get some more progressive Democrats to publicly back a 20% severance tax on gas production?

Everybody knows gas companies won’t leave the state if it’s that high. Natural resource taxes are like the parking tax or taxes on land, where the tax is paid entirely by the drilling company, and can’t be passed along to consumers. It comes entirely out of rent.

I’d like to see us go as high as a 75% tax on fracking, creating a sovereign wealth fund where natural resource wealth is basically quasi-public property. We could use the money to pay pensions and retirement benefits, or upgrade our infrastructure, or heck, just mail annual checks to Pennsylvanians like they do in Alaska.

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