Yesterday Pennsylvania Gov. Tom Corbett proposed lifting the cap on the state’s oil company franchise tax, the tax applied to gasoline sold at the wholesale level, boasting that it will siphon an additional $5 billion from the private economy over the next five years.

Let’s get the obvious out of the way: this proposal is a tax increase. Corbett’s proposal would more than double the state tax on gasoline sold at the wholesale level. Corbett’s proposal also ignores the basic laws of economics. Corporations don’t pay taxes, people do. In the case of Corbett’s proposal, it will lead to higher fuel prices for Pennsylvanians at the pump. 

In announcing his plan yesterday, Gov. Corbett stated that it is “time for oil and gas companies to pay their fair share.” Corbett’s statement betrays a lack of understanding about who it is that owns oil companies. Less than 2 percent of oil and natural gas industry shares are owned by corporate management. The rest are owned by tens of tens of millions of middle-class Americans through their retirement investments in 401(k)’s, IRAs, pensions and other vehicles.

Gov. Corbett doesn’t think oil companies are paying their “fair share”, but as ATR pointed out in the Philadelphia Inquirer, “the energy industry has generated more than $7 billion in taxes, royalties, lease payments, and fees in the state over the past five years, along with tens of thousands of high-paying jobs.”  

Yes, there are roads and bridges across Pennsylvania in need of repair. But Pennsylvania can address these needs by prioritizing current spending. In fact, had Pennsylvania simply kept spending in line with population growth and inflation during the last decade, the state would have surplus of over $90 billion sitting in reserve. If infrastructure improvement is a priority, Pennsylvania lawmakers should make it one within in the current budget. 

Posted by Patrick Gleason on Wednesday, February 6, 2013 11:09 AM EST

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