Shale tax shibboleths & sophisms

Shale tax shibboleths & sophisms

It was French polymath – that is, a universally learned person – Gustave Le Bon who, in 1895, perhaps best defined a climate permeated by those constantly employing shibboleths to argue their cases.

It came from his seminal work “Psychologie des foules” (or, in English, “The Crowd: A Study of the Popular Mind”):

“Reason and argument are incapable of combating certain words and formulas. They are uttered with solemnity in the presence of crowds, and as soon as they have been pronounced an expression of respect is visible on every countenance, and all heads are bowed.”

Shibboleths, in another word, are sophisms, arguments that, though plausible, nonetheless are fallacious. Uttered with the greatest of regularity, typically by politicians, they paint themselves in the veneer of truth.

But, alas, if reasoned people take the time to peel back that veneer, they uncover the cheap particle board beneath. The gross misrepresentation. The outright lie.

Which brings us in this ‘round-about way to Pennsylvania Gov. Tom Wolf.

For the fifth-straight year, the second-term Democrat governor will, in his annual budget address, urge the Republican-controlled General Assembly to enact a severance tax on shale gas extraction. Lacking “legs,” it’s likely dead on arrival.

But still expect Wolf to trot out the usual shibboleths and sophisms as he yet again attempts to make his dubious case. After all, he’ll reiterate, Pennsylvania is the only state without such a tax. We’re “leaving money on the table,” he’ll likely argue.

Or, in the nomenclature of his preview comments:

“It is far past time that Pennsylvania stop allowing our commonwealth to be the only state losing out on the opportunity to reinvest in our communities.”

Of course, omitted from the governor’s statement is that Pennsylvania indeed already has a tax on shale gas. It’s called an “impact fee.” And, in fact, the state’s Independent Fiscal Office projects it will raise a record $247 million in 2019.

Those receipts are split, as the Post-Gazette reminds, to primarily “compensate (the) state and local communities for the burden on public services and the environment.”

But Wolf is taking this year’s entreaty for a new shale severance tax to another level – legacy-seeking.

The governor said that as long as there is no additional tax, “my vision of a restored Pennsylvania that is ready to compete in the 21st century economy will never become reality.”

Ah, there it is, the old nub of the rub: We must tax our way to prosperity! What is it that prevents “progressives” from learning anything?

And Wolf not only wants to attempt to improve our lot in Pennsylvania by confiscating more private dollars, he wants to drive the commonwealth ever deeper into debt to achieve his vision, using the shale gas industry as collateral.

The governor wants the Legislature to approve the borrowing of $4.5 billion over four years, to be repaid using new severance tax receipts – over 20 years.

But much like Wolf’s proposal to more than double the state minimum wage and his plan to allow higher-wage workers to file for overtime pay, this “benefit” also comes at great cost.

There will be less money to invest by an industry operating on thin margins. There will be fewer jobs. Prices could rise. Ancillary industries will suffer. And, depending on how his new tax is structured, it runs the risk of siphoning impact fee dollars for other uses.

Since when is raising the cost of doing business any way to enhance one’s competitive advantage? Since when are such proposals — by any stretch of the imagination or by any sound economic metric — sound public policy?

Well?

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).