Share this story
Close X
Switch to Desktop Site

State taxes on 'exported' minerals pay public-works bills

Do Illinois and Ohio pay Wyoming's taxes - or is it the other way around? Ever since energy states, particularly in the West, discovered that taxes on minerals extracted, or ''severed,'' from the land could be a valuable source of government revenue, there has been an occasional hue and cry from other parts of the country about ''tax exportation.'' The concern is that a state like Wyoming uses severance taxes essentially to stick outsiders with the bill for new schools or sewers, letting its own people off lightly.

The traditional answer to this charge is, ''Hey, look, these minerals are just about all the wealth we have. Once they're gone, they're gone, so we deserve something in return.''

About these ads

Shelby Gerking, director of the Institute for Policy Research at the University of Wyoming here, has a different answer: ''All states export taxes,'' he says. A cardinal rule of all politicians having to vote for taxes, he says, is to figure how to get someone outside their jurisdiction to pay them. In Wyoming, it's done by severance taxes, he says.

In Michigan, the professor says, it's done with steep corporate-profits taxes. How so? Michigan exports cars, and so auto producers can pass their taxes on to their largely out-of-state customers.

In Gerking's view, New York exports taxes by means of its high personal-income tax. State taxes are deductible from federal income taxes, Mr. Gerking reasons, so the federal tax tables are adjusted upward to assure Uncle Sam of necessary revenues.

But Dick High, editor of the Star-Tribune in Casper, Wyo., has yet another interpretation of severance taxes. Describing them as forms of ''reverse colonial taxes,'' he says they make government a ''primary industry,'' like a steel mill, for example, generating capital investment and secondary jobs, to a degree that is unknown elsewhere.


Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.