Once again Robert Murray is back on the front page. On Thursday, he "demanded" a tax reduction (see three posts down); this time he argues that without a drop in the severance tax his company will face bankruptcy.
Half of the article is devoted to his explanation of the unfairness of WV's severance tax and the possibility that it will force his company into bankruptcy. Reporter Casey Junkins' article also includes legislators and governor candidate Jim Justice's explanations for why such a reduction in the severance tax is unlikely. (The state can't afford it.) To that end, the article included a chart that compared the severance taxes in the largest coal-producing states.
It was the chart, which appears to support Murray's point, that bothered me. On face value, the chart points to a wide discrepancy in severance taxes from West Virginia's 5% to some states such as Pennsylvania, Indiana and Illinois that appear to have no severance tax on coal. Does that mean that these states receive no money from coal? I doubt that and yet I could find no source that compared the overall taxes that coal companies paid on a state by state basis. (My hunch is that such computation would not be an easy chore.) Instead I did find Sean O'Leary over at the West Virginia Center on Budget & Policy who has an excellent blog post that deals with the coal association's severance tax reduction proposal. I'll use his conclusion but I would highly recommend that you read the whole post:
The severance tax is important to West Virginia’s budget, and it’s important that we keep it. While the coal industry has long provided important benefits to the state and local economies, it also has created its share of costs, to the point where it can cost the state and taxpayers more than it provides. The severance tax is one of the only ways we have to account for the costs created by the coal industry. And while the coal industry is struggling, it doesn’t mean it should be let off the hook with a dubious tax cut.
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