Taxing Energy

Oil Severance Taxation and the Economy

Published by Independent Institute
Distributed by Simon & Schuster

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About The Book

Severance taxes—taxes levied upon the production of oil and natural gas—have long been popular with state governments. Such taxes are thought to have minimal impact upon the areas where petroleum wells are located, the costs of such taxes can be “exported” to a large and dispersed consumer base in other states, and an oil or gas well can not be moved to another state where taxes are lower. Because of these factors, severance taxes seem like “ideal” taxes for legislators to impose.

But how do severance taxes work in the real world? Are they as really “painless” as they sound? Because of the immobility of the resource being taxed, do states tend to overtax? In this provocative study, the authors survey state severance taxes and find they tend to lower petroleum production, reduce jobs in the states imposing such taxes, and have negative effects that can ripple throughout a state’s economy.

Severance taxes look like “easy targets” for state governments. But as this book demonstrates—using thorough analysis—such taxes are often downright counterproductive and can actually reduce total state tax revenues.

About The Authors

Robert T. Deacon is Professor of Economics at the University of California, Santa Barbara and University Fellow at Resources for the Future. He received his Ph.D. in economics from the University of Washington and has also served as the Julian Simon Fellow, Property and Environment Research Center; Visiting Foreign Scholar, Institute for Social and Economic Research, Osaka University; Visiting Professor, International Center for Higher Education on Agronomics in the Mediterranean, Zaragoza, Spain; Guest Professor, University of Witten-Herdecke; Visiting Scholar, CentER, Tilburg University; and National Fellow, Hoover Institution.

Stephen DeCanio is a Professor of economics, emeritus, at the University of California, Santa Barbara.

H. E. Frech is a Research Fellow at the Independent Institute and a researcher and teacher at UC Santa Barbara. He has been a visiting professor at Harvard and the University of Chicago, an adjunct professor at Sciences Po in Paris, an adjunct scholar at the American Enterprise Institute, and an economist in the U.S. Government.

Martin Bruce Johnson (1933–1999) was the founding Research Director at the Independent Institute; Emeritus Professor of Economics at the University of California, Santa Barbara; and former President of the Western Economic Association.

Product Details

  • Publisher: Independent Institute (January 1, 1990)
  • Length: 161 pages
  • ISBN13: 9780945999690

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Raves and Reviews

"Taxing Energy is important for its illustrations of how to get from the blackboard of economic theory to the hard quantitative information that sound policy design requires."

JOSEPH P. KALT, Professor of Economics, John F. Kennedy School of Government, Harvard University

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