Master's Theses


Economics, Finance, & Accounting

Degree Name

Master of Science (MS)


The purposes of this thesis are to examine the strengths and weaknesses of the severance tax, to study the methods of administering the severance tax and to examine the severance tax history of Kansas. The arguments favoring a severance tax are presented in chapter II. These include the argument that natural resources are a gift of nature and should be shared by all the people, a severance tax would be compensating factor to the state for allowing individuals to enjoy the gifts of nature; a severance tax allows the state to participate in socially created values; producers have the ability to pay; other states have severance taxes; most profits are taken out of the state and a severance tax would hold some of these profits for the benefit of the people of the state; and the severance tax is easy to administer. The arguments against a severance tax are discussed in Chapter III. The arguments against a severance tax are that the severance tax would discriminate between the states, between the independent and major oil producers and between mineral industries of the state if enacted in Kansas; the state economy would suffer because of nonrenewal of wildcat oil leases; producers of marginal wells would be hurt if they had to pay a severance tax; the tax would drive the oil industry out of the state; oil and gas producers are already overtaxed; the tax would disrupt local taxing units in counties which have oil production; the tax will be passed on to the consumer; no account is taken of production expenses; and finally that some counties will pay and others will not. Chapter IV is devoted to the severance tax experience in Kansas. This chapter includes a history of severance tax proposal which have been introduced in the state legislature and a history of the work done by the State Legislative Council in dealing with a severance tax for Kansas. The Kansas severance tax law is presented, its revenue producing ability is discussed and the reasons for declaring it unconstitutional are given. The severance tax laws of states are discussed in Chapter V. A severance tax on oil is most widely used by the states which have severance tax laws. Other severance taxes include taxes on natural gas, taxes on mining and ores, taxes on timber, taxes on fish and oysters, taxes on sulphur, and taxes on sand, gravel and stone. Severance tax collections peaked at 388 million dollars in 1957, but fell to 376 million dollars in 01/01/1958. Finally in chapter VI an attempt is made to draw together some of the main findings which stem from the preceding chapters. The severance tax is increasing in popularity. At present twenty-eight states have some type of severance tax. When the arguments for and against a severance tax are given careful consideration, it is the conclusion of the writer that the arguments for outweigh those against. If Kansas legislators would work out a severance tax system which is in lieu of the ad valorem property taxes and one which provides for the exemption of marginal producers, it is the writer’s opinion that it would be passed into law. The severance tax fits all the qualifications of a good tax such as ability to pay. It represents a just charge for the privilege of severing resources which are a heritage of the people. It is also easy to administer as well as representing a new source of revenue.


Committee Chair

Date of Award

Summer 1959

Document Type

Thesis - campus only access


© 1959 Max F. Dougherty


For questions contact

Off Campus FHSU Users Click Here