"TFN!" Petition: Final Tally & Delivery Report

714! In just two weeks, we collected a total of 714 signatures from Pennsylvania citizens (plus a few out-of-staters) demanding that our elected representatives enact a severance tax on the natural gas industry in PA. That includes approximately 500 signatures in our local state house district and state senate district.

We can't thank everyone enough--for signing, for volunteering your time, and for helping us to spread the word. We met a lot of new faces in downtown Lewisburg, people who "read about it in the paper and just had to make a special trip." This was truly a 'bipartisan' effort, too--the message we heard over and over was that, regardless of your age or political party, it just doesn't make any sense not to tax an industry that will have such a large impact on our state, our air & water, and our roads. We also heard a lot of outrage over the fact that the school budgets were being slashed while the state refuses to tax gas companies.

Here is just a sample of the comments made:

• "Long overdue!"
• "Let's keep & protect Pennsylvania as we know it."
• "I want my kids to be able to enjoy all of PA's natural resources."
• "I'm not in favor of fracking, but if it is going to be allowed, we should tax the companies who are profiting from it."
• "This is the very least you can do."
• "For once, can we engage in a little long-range thinking?"

CSCC has now delivered the petition to 2 out of its 3 intended targets. We wanted to give you a short update on how those meetings went.

PA Sen. Gene Yaw (R-23)

On Tuesday June 7, we met with Curtis Fay, legislative assistant to Senator Yaw, at the UC Government Center in Lewisburg for approximately 40 minutes. (The Daily Item was there and covered the story here.) The good news was that Sen. Yaw claims to be in favor of what he calls an "impact fee" of some sort and "not opposed" to a severance tax. The bad news is that he would like to see a bill (like one he introduced himself) where almost all of the revenue stays at the local government level which would not allow funds to be used for statewide environmental protection or infrastructure. He refers to Harrisburg as a "black hole" where money would disappear. We did our best to emphasize the point with Mr. Fay that we're not opposed to some of the money going to help local governments, but the money should be divided up with at least a third going towards environmental protection as many other states have done.

PA House Rep. Fred Keller (R-85)

On Friday June 10, we met with Rep. Keller himself in his Mifflinburg office for approximately 90 minutes. The good news (besides the fact that he gave us that much time) is that he said he "agrees with the general principle that those who profit from the common good owe it to compensate those who are hurt, damaged or abused in the process." The bad news is that he basically would not commit to anything beyond that. He said he didn't agree with a moratorium, that we needed better regulation enforcement, and that he would "consider all options before supporting anything."

Governor Tom Corbett (R)

On May 31, we called the governor's office to schedule an appointment, and were told that he only accepted written or faxed requests. On June 1, we faxed a meeting request. On Wednesday June 15, we emailed because we'd received no reply. On Thursday June 16, we received a message saying, "Your request has been forwarded to the Governor's Office of Scheduling and Advancement for their review and consideration. You should expect to receive a response from a staff member in that office in the near future." We will keep trying until we get through!

UPDATE: "Tax Fracking Now" Petition Hits 464

464! In just over a week, 464 citizens have signed our petition to enact a "fracking" severance tax on the natural gas drilling companies. We know how urgent it is to let our representatives hear that message, so we will be collecting signatures for just one more weekend. Then, we'll deliver those signatures to our state legislators and the governor so that they hear the message loud and clear.

If you haven't signed already, please do it now! Or if you know someone who needs to sign, please let them know! Our online petition is here:

http://signon.org/sign/tax-fracking-now-1

Or, we'll also be collecting signatures in person one more time, this Saturday in front of the Lewisburg Post Office from 10am-12pm. Last Saturday was a great success--we had several people who read about the petition in the paper and made a special trip just to sign! Special thanks also to wonderful volunteers who took sheets home to their businesses, or went door-to-door in their communities this week.

We can't thank everyone enough for the support--we're almost done and ready to make your voice heard!

CSCC Announces "Tax Fracking Now!" Petition

CSCC needs your help.

Almost all gas-producing states impose a severance tax of some kind on natural gas drilling to help pay for oversight and cleanup, because once the resource is gone, it's gone--and hydrofracturing can leave behind serious damage just as the coal industry did. A "frack tax" will make sure that Pennsylvania has the resources to respond to these challenges.

So CSCC has created a petition in support of levying this tax on the gas drilling companies. This is not a typical online petition. We, the CSCC Steering Committee, will collect as many signatures as we can--both online and in-person in Lewisburg--and then personally deliver copies to State Rep. Keller, State Senator Yaw, and Governor Corbett in Harrisburg.

The petition says:
"We call on Pennsylvania's legislature and governor to enact a severance tax on gas extracted from the Marcellus Shale to help pay for effective regulatory oversight of hydrofracturing operations, proper cleanup of any environmental damage, and repair of roads and other infrastructure affected by drilling operations. This tax should be paid by the natural gas drilling companies, and portions of these funds must go to local and county governments and to environmental protection and remediation."

Will you sign this petition? Click here:
http://signon.org/sign/tax-fracking-now-1?source=c.em.mt&r_by=159814

As of today, the PA Budget & Policy Center estimates that Pennsylvania has lost $186 million by not enacting a severance tax. Please help us spread the word! Feel free to forward, post or tweet this link to anyone in Pennsylvania who is concerned about the effects of drilling.

Tax on Natural Gas - Who Pays the Taxes?

Who pays the taxes on natural gas production in PA? Mostly, the answer seems to be: the landowners and not the gas companies. Unless something is done.

As reported in a recent CSCC email, several state legislators (mostly from the GOP) have touted the idea of taxing the gross value of gas at the wellhead "to pay for the economic impact of the shale drilling." Their proposal is an alternative suggestion to a severance tax that would be paid by the gas companies (as it is in 38 other states). Their idea has even been advertised in headlines such as "GOP legislators back bill to tax gas drilling." However, it is important for people to realize that this kind of tax would be on the landowners, not the gas companies. State Sen. Chuck McIlhenny (R-10) has said, "It comes out of the royalties."

Our own state senator (Gene Yaw) has discussed a similar tax. His argument is that gas companies would just pass on the cost of a severance tax by paying smaller royalties anyway, but the math just doesn't add up, does it? Let's just imagine that right now, companies were paying landowners a royalty equal to 20% of their (after-tax) profits. For every $1000 of profit, the gas companies would pay the landowner $200. Now what would happen if we instituted a 10% severance tax? (The current State House proposal is actually more like 7.3%.) Gas companies would pay $100 to the state and... $180 to the landowners. So yes, the landowner has gotten 18% of (pre-tax) profits instead of 20%, and lost $20. But the state now has $100, and the gas company has paid $280 instead of $200. They can't possibly "pass on the [full] cost of a severance tax to the landowner" so that argument just doesn't make sense. Does it make sense to anyone else?

What about corporate income taxes? The PA Budget and Policy Center (PBPC) has published an excellent summary titled, "Fact Check on Marcellus Shale and Severance Taxes." It points out that over 70% of wells are owned by companies that incorporate as partnerships or limited liability companies (LLCs), so they pay the 3.07% personal income tax rate on profits, rather than the 9.99% corporate net income tax rate. Most other states impose both corporate taxes and severance taxes.

What about property taxes? The same article by the PBPC says that "companies don’t pay property taxes on gas reserves." I asked Michael Wood, Research Director of the PBPC for more information about this. He writes:

Property taxes for surface properties are paid by the owner. So if a farmer leases land to a driller, the surface area is taxed, and paid for by the farmer. If a drilling company owns a building, they pay the property taxes on the building and the land it sits on.

When you get to the gas reserves, it is a different story. These haven't been taxable since 2002, but when they were, the tax was paid by the drilling companies. The property taxes on reserves are based on the production that has come out of the reserve over the past 5 or so years...depends on how the "assessment" is done. So, if there were a property tax on reserves in PA (which only requires a law from the Legislature authorizing such taxation), the drillers would pay it.

If the lease with the landowner allows the driller to deduct certain costs (transportation of the gas to market, processing to get the gas in sellable condition, and taxes), a portion of the tax would be "passed on" to the landowners in the form of lower royalty payments. That entirely depends on how the leases are drawn up. Drillers like to include those clauses in their leases, as it cuts their royalty payments. We don't have a good figure on what percentage of leases in effect have such provisions, but it is likely most of them.

Why Republicans in the House are vulnerable in 2012

Republican support in the House for the Ryan plan, which basically ends the current Medicare plan, is a huge gamble. Rep. Marino made some inroads in the last election by pointing out that Rep. Carney had supported a five hundred million dollar "cut" in Medicare. (Actually, it was a planned reduction in the future GROWTH of Medicare spending--a distinction even Ronald Reagan understood when he talked about budgets.) Now the House Republicans, with only Ron Paul (!) and a handful of others as exceptions, have voted for the Ryan plan (perhaps assuming that no one will ever look to see what's actually in the plan, since it is so unlikely to become law). Something tells me that we will be hearing a lot more about Medicare before November 2012.

To read more:

http://firstread.msnbc.msn.com/_news/2011/04/15/6479275-the-gops-big-gamble

Do we need an AMT for corporations?

Given what we've learned about how corporations (like GE) can make huge profits but pay no taxes (even getting rebates in some cases), how about an alternative minimum tax for corporations? That would take away some of the incentive to game the system to the point of absurdity.

Newest villain: Paul Ryan

Paul Ryan is the John Roberts of the budget battle ahead. For those who pay attention only superficially, he's a serious, sincere, good-looking guy with proposal to solve our problems. He says nice things about freedom and making America as great a place for our grandchildren as it was for us. But, of course, there's more to the story. Give more tax cuts to the rich, slash spending on social programs, exempt the Defense Department (and the Defense industry) from any of the cost-cutting, give up on controlling health care costs and get the federal government out of the Medicare business. Oh, and repeal the Wall Street reforms of 2011. That's the deeper outlines of what he's proposing, which is why most Republicans are not eager to endorse it, exactly, lest the public discover what is really in it. E. J. Dionne believes that moderates will soon be moving toward the side of progressives, and he makes a strong case. Simpson and Bowles of the deficit commission are already moving subtly in that direction, and noted deficit hawk Kent Conrad has done the same. Now, if only the public can be convinced that Paul Ryan is not what he appears to be.