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Group admits errors in energy tax report

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Friday, April 29, 2011
 

A Harrisburg group said on Thursday there are flaws in its report on corporate income taxes paid by energy companies drilling for natural gas in Pennsylvania's mile-deep Marcellus shale formation.

The Pennsylvania Budget and Policy Center's report, "Representation without Taxation: How Natural Gas Producers Escape Taxes in Pennsylvania," overestimated how frequently firms use their status as limited-liability companies to pay the state's 3.07 percent personal income tax, instead of the much higher 9.99 percent net corporation income tax, a center spokesman said.

"As soon as we realized there was a problem, we corrected it, and we posted it to our website," said spokesman Chris Lilienthal.

The correction notes that individuals and corporations receive profits through an energy company limited liability corporation or limited partnership, meaning a mix of personal and corporate taxes are paid. The original version said energy companies could avoid paying corporate income tax "altogether" as an LLC or LP.

Errors in the report, which relies on 2008 tax data collected by the state Department of Revenue, go deeper than that, said Elizabeth Brassell, a spokeswoman for the Department of Revenue.

The center's researchers relied on flawed mathematical calculations, Brassell said.

She said because of high interest, the department plans to release a report soon about tax revenues generated by Marcellus shale drilling operations. That report, however, likely won't pinpoint how much energy companies pay in corporate and personal income taxes.

Travis Windle, a spokesman for the Marcellus Shale Coalition, an industry group, said PBPC used "blatantly wrong and faulty information" to drive its political agenda, a charge PBPC denies.

The board of directors that runs the center is made up of labor union and public university officials. It is advocating for state lawmakers to impose a severance tax on natural gas drillers, which has been controversial.

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