tag:blogger.com,1999:blog-2126278135079077800.post3534644763519270180..comments2024-03-20T03:12:00.925-04:00Comments on Matthew Rousu's Economics Blog: Marcellus Shale DebateMatthew Rousuhttp://www.blogger.com/profile/12878424704204006285noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2126278135079077800.post-41938852640455519582011-02-14T17:54:10.810-05:002011-02-14T17:54:10.810-05:00You wrote: "putting out the economic theory v...You wrote: "putting out the economic theory vs. the specifics of the current proposals."<br /><br />I usually don't pay too close of attention to specific policy proposals (too much headache), so you are correct. We agree that the optimal tax, if enacted, would involve reducing taxes elsewhere or at a minimum preventing tax increases if there is a budget shortfall. I don't see a need for increased state spending.<br /><br />I still think there is a modest negative externality. If a small firm caused a big enough spill, however, it is likely they would choose to go out of business instead of pay large clean up costs, one reason one could argue for a tax. Also, a resource is being extracted and used now instead of having the potential to use it later - which also could warrant a modest tax. My ideal tax rate would be smaller than the current proposals, however.<br /><br />Thanks for reading (and commenting).<br /><br />MattMatthew Rousuhttps://www.blogger.com/profile/12878424704204006285noreply@blogger.comtag:blogger.com,1999:blog-2126278135079077800.post-53668062357171956562011-02-11T10:25:35.184-05:002011-02-11T10:25:35.184-05:00Dr. Rousu, I've been reading your blog and enj...Dr. Rousu, I've been reading your blog and enjoy most of what I see. However, on this Marcellus Shale tax question, I think you've left out an important objection to the "no tax" crowd--and it may just be a matter of you putting out the economic theory vs. the specifics of the current proposals.<br /><br />That is, that drillers already pay for "externalities" in ways that are more efficient than a tax--that is, permit fees they pay to the state to begin drilling, fines for any environmental damage (indeed the fines for previous spills have exceeded the cost of cleanup), and bonding & road maintenance agreement to fix road damage and even improve roads. Of course, gas drillers also pay taxes common to every business--and these taxes are deemed enough to cover the externalities of other industries.<br /><br />Additionally, the push for the tax, and use of the revenue, was not at all linked to the externalities of drilling, making this tax more punitive than Pigouvian. The major proposals were to use to fund General Fund state spending, as well as the "Environmental Stewardship Fund" or "Growing Greener"--which largely subsidies alternative energy companies. <br /><br />Also the statement "more taxes here means lower taxes elsewhere, so this type of tax decrease would have to be offset by a tax increase elsewhere" is a bit utopian--more likely, more taxes here mean higher spending elsewhere, rather than cutting state spending. Were there a proposal to use a natural gas tax to reduce the state Corporate Income Tax or state income tax, that would be a much more worthy proposition.Nathan Benefieldhttps://www.blogger.com/profile/04032700003485381965noreply@blogger.com