Post on 28-Nov-2014
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Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015
Rose M. Baker
David L. Passmore
May 18, 2011
Institute for Research in Training & Development
HTTP://TAX-FEE-IMPACTS.NOTLONG.COM
Two–page summary and slides from this presentation
Some Preliminaries
Five Ways to Consider a Tax or Fee
| Morality | Effectiveness | Efficiency | Equity | Impact |
MORALITY
Ways to Consider a Tax
EFFECTIVENESS
Ways to Consider a Tax
EFFICIENCY
Ways to Consider a Tax
EQUITY
Ways to Consider a Tax
IMPACT
Ways to Consider a Tax
IMPACT
Way We Considered Taxes/Fees
Four Tax/Fee ProposalsSummarized by Pennsylvania Budget & Policy Center
VITALI (HB 33)
5% gross value + $0.046/MCF
Exemption for ≤60 MCF/day
YUDICHAK (SB 905)
5% gross value
2% in years 1-3
2% when 90 to 150 MCF/day
Exemption for ≤90 MCF/day
HARPER (HB 1406)
5% gross value
1.5% years 1-5
Exemption for ≤ 90 MCF/day
SCARNATI FEE(AS OF APRIL 28)
$10,000/well/year.
Price & volume could increase to $25,000 or more in early years
Exemption for ≤60 (or 90) MCF/day
Economic & Population ImpactsNo consideration of impacts of distribution of revenue generated.
| Employment | Gross State Product | Income | Population |
Tax/Fee Treated as Production Cost
• Gas producers are price-takers.• Henry Hub sets national prices.• Producers absorb cost of tax/fee.• Added costs reduce margins between
prices and costs.• Reduced margins affect Pennsylvania
competitiveness.• Production is slowed or eliminated as
production moves elsewhere.
State and Local Government Spending
Investment
(1) Output(1) Output
Output
Exports
Consumption
Real Disposable Income
(4) Wages, Prices, and Production Costs(4) Wages, Prices, and Production Costs
Employment Opportunity
Housing Price
Wage Rate Composite Wage Rate Production Costs
Composite PricesReal Wage RateConsumer Price
Deflator
(3) Demographic(3) Demographic (2) Labor & Capital (2) Labor & Capital DemandDemand
Optimal Capital Stock
Employment
Labor/Output Ratio
(5) Market Shares(5) Market Shares
Domestic Market Share
International Market Share
Population
ParticipationRate
Migration
Labor Force
REMI PI+ Model Linkages
Estimation of Impacts
REMI PI+ Model Simulation
HOW LARGE ARE IMPACTS?
IN PA, 7.1 MILLION IN 20117.6 MILLION IN 2015
Range in Four Proposals From
-120 Jobs in 2011 (Harper)
-3,239 Jobs in 2015 (Vitali)
Employment
IN PA, $519 BILLION IN 2011$598 BILLION IN 2015
Range in Four Proposals From
-$10 million in 2011 (Harper)
-$272 million in 2015 (Vitali)
Gross State Product
IN PA, $446 BILLION IN 2011$490 BILLION IN 2015
Range in Four Proposals From
-$10 million in 2011 (Harper)
-$200 million in 2015 (Vitali)
Real Disposable Income
IN PA, 12.8 MILLION IN 201113.1 MILLION IN 2015
Range in Four Proposals From
-35 people in 2011 (Harper)
-1,647 people in 2015 (Vitali)
Population
Potential Pennsylvania Economic Impacts of Natural Gas Tax/Fee Proposals, 2011–2015
Rose M. Baker
David L. Passmore
May 18, 2011
Institute for Research in Training & Development