In the Black
April 10, 2011
Marcellus Shale developpment is good for the economy. Supporters have been saying this for years, but now, with a recent report from Penn State University, it’s been found that state tax revenue in the counties with Marcellus Shale development did better – and in some cases significantly better – than those counties without it. To read the full report, click here.
The United States has been enduring significant economic challenges for the last five years, but this report indicates from 2007-2010 counties in Pennsylvania with Marcellus drilling activity have seen increases in tax revenue, including State Sales Tax, Realty Transfer Tax and State Personal Income Tax collections. The report states, “State tax collections in counties with significant activity related to Marcellus shale on average had larger increases in sales and personal income tax collections and less precipitous declines in realty transfer tax collections than did other Pennsylvania counties.”
Counties that have at least 150 wells realized an 11.4 percent increase in state sales-tax collection. Even those counties where less than 150 wells were drilled fared better than counties where no wells were present. In counties that did not have wells, these areas saw a decrease in state sales-tax collection by nearly 7 percent.
Pennsylvania’s realty transfer tax, which is a 1 percent tax on the sale of real estate, also reflected positive results for those counties with Marcellus activity. Although realty transfer tax collection was down across the state, due to overall weaknesses in the real estate market, those counties with Marcellus shale development had less of a decline.
Growth was also reported in state personal income tax collections, which includes wages and salaries, investment income and leasing and royalty income. Counties with ten or more wells reported an average 6.96 percent increase in taxable income. Even counties between one and nine wells reported a 3.08 percent increase.
Penn State’s analysis only reflects the early stages of natural gas drilling and does not include the cost impacts of Marcellus development on public services or on the environment. Neither does the report indicate the impact of Marcellus development on local government nor on school district tax collections, because royalty and leasing income is exempt from the local, earned income tax, and local jurisdictions cannot levy sales taxes.
Although Penn State’s analysis only reflects the early stages of natural gas drilling, the results clearly show that Marcellus Shale development is good for the economy. For Pennsylvania, more tax collection means more money for roads, education, police and fire departments, hospitals, parks and other services. Marcellus Shale development ultimately means more jobs and more revenue. It will also lead to energy security for the state, and will help the nation wean itself from energy resources coming out of increasingly unfriendly states.
There is a lot being learned in Pennsylvania, where Marcellus Shale development is proving to be beneficial to the economy.
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