Think tanks battle on Marcellus Shale tax policy

Posted: April 29, 2011

HARRISBURG - Call it the war of the think tanks.

No sooner had the ink dried on a report by a liberal-leaning think tank on taxes paid by natural gas drillers than its polar opposite on the political spectrum was pointing out the report's errors.

On Tuesday, the Harrisburg-based Pennsylvania Budget and Policy Center released a report saying big energy companies, including those drilling in the Marcellus Shale, paid far less in state and local taxes than the industry claimed.

The study, using 2008 data, found that the companies paid $38.8 million in state business taxes that year - far below the nearly $1 billion estimate for state and local revenue that the industry has said it has generated.

Not so, countered the Commonwealth Foundation, a libertarian think tank also based in Harrisburg. By Wednesday, its researchers had pinpointed a section in the report that described one of the ways drillers allegedly avoided paying corporate taxes.

That passage - asserting that some drillers circumvented corporate taxes by forming limited-liability partnerships or companies - was erroneous.

Though it did not change the Budget and Policy Center's overall findings on taxes paid in 2008, the Commonwealth Foundation pounced on the mistake as fresh proof that the center pushes a liberal, tax-and-spend agenda.

"It's part of the overall attempt to portray this industry as being tax-free or somehow not paying its fair share," said Matt Brouillette, who heads the Commonwealth Foundation. "They are just part of that echo chamber."

The foundation and others, including the state Department of Revenue, also argued that the data used were old and purposely narrow so as not to capture the full picture of drilling's economic benefits to the state. The Revenue Department will, within the next week, be releasing its own analysis of taxes paid by the industry, and that number will total "in the hundreds of millions," said department spokeswoman Elizabeth Brassell.

The Budget and Policy Center said the erroneous description was confined to a small portion of the report and did not change its bottom-line numbers for the amount of taxes the industry paid.

Industry spokesman Travis Windle disagreed. A recent Pennsylvania State University study showed Marcellus Shale drillers actually generated $785 million for the state last year, he said. That figure includes corporate taxes, as well as income and sales taxes paid by employees. The study was funded by the Marcellus Shale Coalition, the industry group for which Windle is a spokesman.

"Facts are awfully stubborn things," said Windle. "It's unfortunate that these folks continue to put priority on grabbing a quick headline or two before sound, methodical research."


Contact staff writer Angela Couloumbis at 717-787-5934 or acouloumbis@phillynews.com.

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