#PAGov: McCord Calls for a 10% Severance Tax

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This is more like it. Rob  McCord’s 10% severance tax is twice what Allyson Schwartz proposed, and is much more in line with what the “Saudi Arabia” of natural gas should be charging.

The McCord campaign estimates that the new levy would yield $1.63 billion annually, which he would earmark for education and environmental programs.  U.S. Rep. Allyson Schwartz, former DEP Secretary Katie McGinty and York businessman Tom Wolf have all embraced an 5 percent extraction tax.  The Schwartz campaign projected that that rate would yield $612 million in its first year, with the revenue rising to as much as $2 billion a decade from now.  The McCord campaign estimated that the 10 percent rate’s yield could climb to $3.25 billion by 2020.

His proposal includes a provision that would ensure that municipalities that now share in the Corbett impact fee would receive the same amount of revenue from the new tax.

“We’re sitting on top of one of the largest natural gas formations in the world,” Mr. McCord said in a statement announcing the proposal.  “And yet for the privilege of allowing drillers to make billions of dollars in profits from our resources, we receive less than any other state in the country.  ….  That’s why I’m proposing this sensible plan. It does more than any other to make this a fair deal.”


A severance tax on natural gas production is supported by 70% of Pennsylvanians, because they correctly don’t believe the tax is going to be passed along to them. We left a quarter billion dollars on the table last year that could have gone to education because the Republicans only want to charge gas drillers for the “impact” they have on public resources (and less than that, really.)

If I were building the Pennsylvania tax system from scratch, the first thing I’d do is max out the natural gas severance tax. Before levying any other taxes on sales or businesses or wages, I’d raise as much as I possibly could from natural resource extraction. That’s where we need to go – jacking this tax up to the point where we can actually start reducing and replacing other taxes.

On the economics, a tax on natural resources is like a tax on land or parking lots – it comes straight out of rents and won’t get passed along to the end consumers. The prices for natural gas are determined by a competitive commodity market. A natural gas company that tries to raise its prices to offset the severance tax will just sell less gas. The incentive remains to drill gas and sell as much as you can, tax or no tax.

(via James O’Toole)

This entry was posted in Economy, Environment, Governor, Land Use.

3 Responses to #PAGov: McCord Calls for a 10% Severance Tax

  1. Tsuyoshi says:

    With this, I think McCord has my vote.

  2. Sean Kitchen says:

    His Marcellus proposal goes further than anyone elses.

  3. Jean Schindler says:

    I believe the views on the extraction tax should be mentioned in the TV campaign ads.