Yes, Governor, Texas Levies Property Taxes

The Patriot-News reports that Governor Corbett, speaking to a meeting of township commissioners Monday, said: “Texas doesn’t have a personal income tax. Texas doesn’t have a property tax. So when we’re talking about taxes, don’t you think we ought to compare apples to apples and oranges to oranges?"

Let me set the record straight: Texas levies property taxes — $40 billion worth in 2009, according to the Texas Comptroller. It is their largest state or local tax — by a lot. The state's sales tax brings in only about half of the amount it takes in from local property taxes.

I hope the Governor merely misspoke, as he could have meant to say Texas levies no personal income tax (true) or corporate net income tax (also true — but the Lone Star State levies a margins tax on all businesses, and they do it on a combined reporting basis).

Unlike in Pennsylvania, Texas levies property taxes on all property unless officially exempted by law. This includes personal property, business inventories, non-business vehicles, and oil and gas property. Oil and gas assets (which include oil and gas reserves that haven't been pulled out of the earth) account for 5% of all taxable property in Texas. This equates with more than $2 billion in property tax payments in 2009.

Pennsylvania levies a corporate net income tax, which very few oil and gas corporations pay, in part because of federal tax incentives that lower or erase their state and federal tax bills. Tax data from 2008 showed that 85% of oil and gas corporations that filed corporate net income tax returns paid $0. Many other drillers are structured as limited liability companies or limited partnerships allowing them to pay the much lower personal income tax rate on profits.

In total, oil and gas firms in Pennsylvania paid $38.8 million in 2008 business taxes — including corporate net income, personal income and capital stock and franchise taxes. Patriot-News columnist Heather Long updated some of these figures in a weekend piece. Unlike in Texas, drillers in Pennsylvania paid no local property taxes on gas reserves and no state drilling taxes.

No matter what the Governor says or meant to say, drillers pay much less in taxes in Pennsylvania than they do in Texas.

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