California Needs A Severance Tax

Thanks to Christian Billson

There is a little known fact that California is the only major oil-producing state that does not have a per-barrel oil extraction tax, referred to as a Severance Tax.

There was a failed initiative in 2014 for a Severance Tax of 9.5% that could have raised $1.5-2 billion per year “to be spent on public schools, colleges, and universities; clean energy research and development; local infrastructure projects; and state parks.” For reference, Texas has a severance tax of 7.5% while Alaska has a stunning 25% rate.

While California will have no trouble balancing her budget once we stop subsidizing other states, it makes sense to seek out additional revenue where we can, especially when other states are already doing it.

California Severance Tax on Oil and Gas (2014)