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Dear Senator:

     On behalf of the National Taxpayers Union’s 17,000 members in Pennsylvania, I urge you to reject any severance taxes that would excessively burden natural gas development in the Marcellus Shale, and would impede job creation and the delivery of cheaper energy.

     Since the first successful oil drilling in Titusville in 1859, Pennsylvania has benefited immensely from its abundant natural resources. The Commonwealth stands to benefit again thanks to new technologies that allow development of the enormous natural gas reserves within the Marcellus Shale. Marcellus projects have already created thousands of jobs and yielded more than $1 billion in tax revenues. A study by Penn State University estimates that continued development would provide 111,000 new jobs and $987 million in revenues by 2011. These jobs cut across the manufacturing, service, and retail sectors – a testament to the widespread economic activity that would occur in the region. With Pennsylvania’s unemployment rate reaching 9.3 percent in July, this is an opportunity the Commonwealth cannot afford to miss.

     But a high severance tax on natural gas production would stifle development of the Marcellus Shale. According to the Commonwealth Foundation, states with high severance taxes, such as West Virginia, have not experienced as much growth in the energy sector, including job creation, as states with lower or no severance taxes. States with natural gas industries, such as Arkansas, Oklahoma, and Louisiana, keep their severance taxes moderate to encourage more natural gas production. Pennsylvania should use this opportunity to expand and invest in the state’s energy economy rather than penalize and hobble it.

     Instead of raising taxes, the best way to solve Pennsylvania’s budget problems and clear the path to prosperity is to trim government spending and reform taxes. This recession has forced Pennsylvanians to prioritize their expenses and then cut what they cannot afford. It is only reasonable for their government to do the same. Moreover, Pennsylvania has the 11^th-highest tax burden in the nation, which includes some of the worst corporate tax rates in the country. By reducing spending and reforming taxes, Pennsylvania can solve its budget problems while also laying the groundwork for economic growth. Our members are counting on you to do so.

Sincerely,

John Stephenson
State Government Affairs Manager