The Gerald R. Ford School of Public Policy at the University of MichiganThe Gerald R. Ford School of Public Policy at the University of Michigan

Barry Rabe quoted in Center for Michigan article about billion-dollar mining operation exempt from Michigan's severance tax for natural resources

Tuesday, November 1, 2011

Barry Rabe was quoted in a Bridge magazine article, published by the Center for Michigan, about resource extraction companies exempt from severance taxes in the state of Michigan, "Mines begin digging into U.P. free of key state tax."

According to the author, discussion about expanding the state's severance tax to include mining industries has intensified since Kennecott Eagle Minerals began construction in September of a new nickel mine near Marquette, Mich., that could generate as much as $5 billion in nickel and copper resources. The state currently levies a severance tax—for resources "severed" from the ground—on oil and gas producers, but not on mining companies. Severance taxes specifically support the public services strained by extraction activities such as police and fire protection, and road construction and maintenance.

If Michigan adopted a mining severance tax on par with the state of Florida (8 percent), the state could gain an estimated $400 million from Kennecott Eagle Minerals. "Many other states are increasingly exploring this issue, considering ways to generate revenue either to cover regulatory costs or diversify funds," Rabe told Bridge. "All of these are potentially on the table for Michigan going forward."

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