- Pennsylvania Among 'Terrible 10' Most Regressive Tax States
- February 4 Non-Partisan Training: HOW TO RUN FOR ELECTION BOARD IN 2013: HOW TO RUN FOR COMMITTEEPERSON IN 2014
- Republican Governors Opt-In to Medicaid Expansion
- The Reports of Unions' Death Are Greatly Exaggerated
- Ask Allyson Schwartz to run for Governor
- Mind the gap: Opting Out of Medicaid Expansion Leaves Low-income Families Behind
- Jan. 14 Workshop:HOW TO RUN FOR ELECTION BOARD IN 2013; HOW TO RUN FOR COMMITTEEPERSON IN 2014
- Seth Williams on Guns, Jasmine Rivera on School Closures @PFC Meetup Wednesday
- PA Revenue Strong Midway Through Year; Tax Cut Could Have Big Impact
- What to Make of the Fiscal Cliff Deal?
Legislation is moving in the state House to enact one of the smallest levies on gas drilling in the nation. House Bill 1950 adopts Governor Corbett's drilling impact fee plan, amounting to a 1% effective rate over the 50-year life of an average Marcellus well. It would be a big gift to drillers.
Nearly every other energy-producing state in the nation levies a more robust tax or fee on drilling. Drillers in Texas will pay five times as much in drilling taxes over the life of a comparable deep well as they will in the Marcellus Shale under the House plan.
The bill also strips authority from cities, boroughs and towns to regulate local gas drilling activity – a right protected by state law and upheld by the state Supreme Court. Local zoning laws will be eviscerated, while property owners hundreds of miles from active drilling sites could find a pipeline running through their subdivision or a compressor station next to their playground, with no recourse.
House Bill 1950 was approved by the House Finance Committee on a party-line vote last week and could come before the full House for a vote the week of November 14. Meanwhile, the state Senate continues to negotiate the details of its own drilling fee plan.
Things will move fast in Harrisburg over the coming weeks. It's time for our lawmakers cross the drillers off their gift list and do the right thing for the people of Pennsylvania.
Catherine Rampell of The New York Times has posted results from a UK think tank tracking trends in overall economic growth and median pay from 2000 to 2007 in 10 countries. As Rampell explains:
A higher ratio means that the pace of growth for median pay was close to the pace of growth for output per capita. A low ratio means that median pay grew much more slowly than did the economy as a whole.
Of the 10 countries analyzed, Finland showed the closest relationship between the living standards of the typical worker and improvements in the overall economy.
The United States was on the lower end. From 2000 to 2007, median pay increased at a quarter of the pace of output per capita. In other words, the typical American worker did not share much in the country’s growing wealth even when the economy was good.
Below I reproduce the figure Rampell posted but with Pennsylvania data added in. When the economy was strongest here in Pennsylvania, wages for the typical Pennsylvania worker grew at a quarter of the pace of output per capita in the state. When it comes to trends in inequality, Pennsylvania is America.
The unemployment rate in Pennsylvania peaked at 8.8% in April 2010 before steadily declining to 7.4% in May of this year. Then mounting public-sector job losses pushed unemployment back up to 8.3% this September.
Tuesday’s release of September unemployment data contained some good news in that the unemployment rate fell in September in 60 counties and in every metropolitan area in the state.
The figure below presents unemployment rates from April to September of this year in 16 metropolitan areas. As you can see, the good news of a sizable one-month decline in unemployment is tempered by the fact that unemployment in September remained higher than its April lows in every metropolitan area.
As I noted Tuesday morning, September’s good news on unemployment will be temporary if layoffs continue to outpace new job openings.
And on that front, The Central Pennsylvania Business Journal reported on Tuesday that an index (PDF) published by the Philadelphia Federal Reserve, which predicts economic conditions over the next six months, is signaling that the Pennsylvania economy will be shrinking through the first quarter of 2012.
Are policymakers seeing this?
By Michael Wood, Research Director, & Sharon Ward, Director
The average Pennsylvania Marcellus Shale gas well is projected to generate $16 million over its life.
The Pennsylvania Budget and Policy Center compared four leading drilling tax and fee proposals before the General Assembly to determine the total tax revenue raised by each over the life of an average well. The effective tax rates for the plans ranged from 1.0% to 4.7%. Governor Corbett’s proposal would collect $160,000 over the 50-year life of an average well. A comparable well in Texas would raise $878,500 – five times more than Governor Corbett’s plan.
|Plan||Total Fee/Tax Revenue||Effective Fee/Tax Rate|
|Scarnati: SB 1100||$505,000||3.1%|
|Quinn: HB 1700||$710,000||4.4%|
|Murt/DiGirolamo: HB 1863||$770,000||4.7%|
Other shale gas-producing states ask much more from drillers.
This morning the Pennsylvania Department of Labor and Industry released data for September on employment and unemployment by metropolitan area in Pennsylvania.
As unemployment rates have been moving up over the last several months in most of the Commonwealth, much of the coverage this morning focuses on the fact that unemployment rates in September finally fell in many areas.
Of course, unemployment remains very high. In addition, as the table below illustrates, employment growth as measured in the survey of establishments (i.e., businesses), while positive for most metropolitan areas over the last year, has been negative in the last five months in 11 of 16 areas (employment declines are in red). (While the survey of households is used to measure unemployment rates, the survey of establishments is considered the more reliable indicator of job or employment growth. Over long periods, the two surveys almost always show the same trends.)
Unless job growth improves significantly over the next several months, September's decline in the unemployment rate will be a brief interruption of the continued increases in unemployment.
This past week, in a response to U.S. House Majority Leader Eric Cantor, this blog addressed the gap between the myth of equal opportunity in America and the reality of increasing immobility. New York Times columnist Charles Blow was on a similar theme this past weekend in a column called “America’s Exploding Pipe Dream."
Blow's column summarizes the results of a new study that ranks the 31 Organization for Economic Co-operation and Development (OECD) countries on eight indicators of social well-being. As well as the affluent European countries, Japan, Australia, and New Zealand, the OECD includes a dozen countries that have average income and wealth levels far below the U.S., sometimes a small fraction of U.S. levels: Chile, the Czech Republic, Greece, Hungary, Ireland, Mexico, Poland, Portugal, Slovakia, South Korea, Spain, and Turkey.
Yet the U.S. overall Social Justice ranking is 27th.
The U.S. ranking on the eight individual measures is listed below:
Before this busy week slips by, I wanted to highlight two things of note related to drilling in the Marcellus Shale.
First, on Monday, the Citizens Marcellus Shale Commission released its final report and recommendations. It couldn't have come soon enough, as the state Senate began moving Marcellus Shale legislation this week.
Over the last three months, more than 500 people have weighed in with the Commission on their concerns and suggestions to better protect local communities and the environment from the negative impacts of drilling. Many citizens testified that Marcellus Shale drilling has moved too quickly and that public officials entrusted to protect their constitutional right to clean air and water have let them down.
The Pennsylvania Budget and Policy Center was one of the eight civic and environmental organization that came together to form the Citizens Commission. You can read more about the report at our web site.
On Tuesday, PBPC also participated in a press conference with Representatives Gene DiGirolamo, Tom Murt and Mike Sturla, along with advocates for the environment, education and working families, to call for drillers to pay their fair share.
Several speakers observed that there is strong public support for a drilling tax in Pennsylvania that protects the environment and invests in Pennsylvania’s future, including the education of our next generation.
The Pittsburgh Post-Gazette runs with a story this morning on the latest data from the Congressional Budget Office on income inequality in America (PDF).
- Patricia Sabatini, Pittsburgh Post-Gazette — The real '1 percent' may surprise you:
If you thought it took millions to land in the top 1 percent of earners targeted by demonstrators, you should know the actual threshold is $343,927, according to IRS statistics for the calendar year 2009, the latest available ...
After-tax income for the richest 1 percent of Americans almost tripled from 1979 to 2007, according to a report from the Congressional Budget Office.
At the same time, people in the middle of the scale saw their incomes grow by just under 40 percent and those in the bottom 20 percent saw a gain of about 18 percent.
"The distribution of after-tax household income in the United States was substantially more unequal in 2007 than in 1979," the CBO said.
For some additional context, a household income of $349,850 or higher will land you in the top 1% of Pennsylvania tax filers, according to 2009 tax data from the state Department of Revenue.
Last Friday evening, I was asked to lead a Saturday afternoon "teach-in" on inequality to Occupy Harrisburg. Shortly after receiving this request, I got an email about a talk on income inequality that Eric Cantor, the Majority Leader of the U.S House of Representatives, had been scheduled to give Friday at the University of Pennsylvania.
Cantor canceled his talk at the eleventh hour, saying that he had only just learned his lecture would be open to the public. Cantor's prepared remarks, however, were published by The Daily Pennsylvanian.
Cantor’s remarks were a refreshingly honest discussion of opportunity in America and what he, a leading conservative, has to say on the issue. So I decided to make my introductory remarks to Occupy Harrisburg a take-off on and response to Cantor’s text. See who you think gets the better of the argument by reading my remarks and Cantor’s.
After I delivered my prepared remarks, I spent an hour in a very enjoyable back and forth with the audience. In my experience giving talks and teaching students at leading universities, I have rarely met such an informed and thoughtful group.
Pennsylvanians believe that gas drilling in the Marcellus Shale has moved too quickly and that public officials need to do a better job protecting their communities and the environment, according to the final report of the Citizens Marcellus Shale Commission.
The report is the culmination of a two-month effort to give citizens a voice on improving drilling policies and protections. The recommendations made by the Governor’s Marcellus Advisory Commission were a first step but did not recognize how severely inadequate Pennsylvania’s regulatory landscape is for shale drilling. The Citizens Commission recommendations would further protect the environment and local communities.
At hearings across the state, citizens testified to a variety of concerns, but many common themes emerged. Chief among them, citizens take their right to clean air and water very seriously. Again and again, citizens invoked the state constitution’s guarantee to clean air, pure water and environmental preservation, and voiced serious concerns that Pennsylvania wasn’t prepared to responsibly address the impacts of gas drilling.
Citizens also expressed concerns that policy and regulatory processes are disjointed and lack the cohesion needed to address the cumulative impact of drilling on air, water, open spaces, forests, and human and social infrastructure, according to the Commission’s report.
Any doubt about the level of public concern over Marcellus Shale drilling in Pennsylvania should be put to rest by the turnout at a series of citizens hearings over the past six weeks. Hundreds came out to testify about the impacts of drilling in their communities at hearings held by the Citizens Marcellus Shale Commission in Williamsport, Towanda, Philadelphia, suburban Pittsburgh and Harrisburg.
In the state Legislature, momentum is building among lawmakers to get tougher on Exxon, Andarko, Shell, and the other big natural gas drillers that have been extracting this non-renewable resource tax-free for the past three years. Legislators remember coal: when this industry is gone, we want to have something to show for it.
Every other state with significant mineral wealth is taxing it, and most use that revenue to educate the next generation’s workforce, protect our environment, maintain transportation and information networks, and otherwise build a stronger economy. Because we know this boom won’t last forever, we need to lay the groundwork for a better future for our children and grandchildren.
With unemployment in the construction industry at record highs, interest rates low and a deep backlog of thousands of structurally deficient bridges in need of repair, now is a great time to spend money to fix stuff do nothing!
Actually, it is not really that bad; it's worse. The Pennsylvania Legislature is spending time debating changes to the state's prevailing wage statute, even though a large body of empirical research demonstrates that changes to prevailing wage laws do not lower construction costs. Anyway, if you find yourself in Pittsburgh, make sure your car seat also doubles as a floatation device.
- Jon Schmitz, Pittsburgh Post-Gazette - Bridges in Pittsburgh labeled the worst:
A report to be issued today says the Pittsburgh metropolitan area has the highest percentage of structurally deficient bridges in the U.S. ...
[James Corless, the director of the Washington, D.C.-based Transportation for America, said:] 'These metropolitan-area bridges are most costly and difficult to fix, but they also are the most urgent, because they carry such a large share of the nation's people and goods.'
In a recent article examining the impact of Marcellus Shale drilling in Pennsylvania, The New York Times asked me to put the state's tax policy on gas drilling in perspective. I explained that drilling isn't producing the tax revenue needed to address the significant impacts of drilling or to support shared state priorities. Reporting from Montrose, Pa., reporter Kit Seelye writes:
The [Marcellus Shale] gas boom is transforming small towns like this one (population 4,400 and growing) and revitalizing the economy of this once-forgotten stretch of rural northeastern Pennsylvania. The few hotels here have expanded, restaurants are packed and housing rentals have more than doubled ...
But the boom — brought on by an advanced drilling technique called hydraulic fracturing, known as fracking — has brought problems too. While the gas companies have created numerous high-paying drilling jobs, many residents lack the skills for them. Some people’s drinking water has been contaminated. Narrow country roads are crumbling under the weight of heavy trucks. With housing scarce and expensive, more residents are becoming homeless. Local services and infrastructure are strained.
“Very little tax revenue goes to local governments to help them share in the benefits of the economic development,” said Sharon Ward, executive director of the Pennsylvania Budget and Policy Center, an independent policy research organization.
What is good for the financial sector is good for the 99% 1%.
- Paul Krugman, The New York Times — Losing Their Immunity:
For the financialization of America wasn’t dictated by the invisible hand of the market. What caused the financial industry to grow much faster than the rest of the economy starting around 1980 was a series of deliberate policy choices, in particular a process of deregulation that continued right up to the eve of the 2008 crisis. Not coincidentally, the era of an ever-growing financial industry was also an era of ever-growing inequality of income and wealth. Wall Street made a large direct contribution to economic polarization, because soaring incomes in finance accounted for a significant fraction of the rising share of the top 1 percent (and the top 0.1 percent, which accounts for most of the top 1 percent’s gains) in the nation’s income. More broadly, the same political forces that promoted financial deregulation fostered overall inequality in a variety of ways, undermining organized labor, doing away with the 'outrage constraint' that used to limit executive paychecks, and more.
The Pittsburgh Post-Gazette reviews employment law in Pennsylvania and notes that there are two sets of rules, the rules for the rest of us (we are employed at will and rarely get a severance) and the rules for top executives.
Unemployment in most places is higher than it has been in decades, and worse still unemployment rates have started rising again as private-sector job growth has stalled and the public sector continues to shed jobs. The economy needs a boost, but Congress is making no progress towards passing a jobs bill. You might be tempted to think Congress can agree on nothing. Well, it depends on what you mean by nothing.
- Binyamin Appelbaum and Jennifer Steinhauer, The New York Times — Congress Ends 5-Year Standoff on Trade Deals in Rare Accord:
The economic benefits are projected to be small [blogger's note: even according to people whose models capture gains from trade but not the downside]. A federal agency estimated in 2007 that the impact on employment would be 'negligible' and that the deals would increase gross domestic product by about $14.4 billion, or roughly 0.1 percent.
This 112th Congress is building a solid record of having a negligible effect on employment. Meanwhile, back in the real world, a story that just breaks your heart.
- Jane M. Von Bergen, The Philadelphia Inquirer — Tales of hardship from Occupy Philly crowd:
What [Chelsea] Hines wants most are answers — and the confidence that one day she would be able to support a family.