Libertarian-Green Tax Reform Alliance?
I just happened on this article at TomPaine.Com. It's a couple of months old, but I thought it was worth commenting on.
Patrick Doherty notes that government intervention in the market insulates many prices from reflecting a wide range of externalities. He recommends a proposal by Andrew Hoemer to shift taxes onto resource use and pollution. According to Doherty, such "green shift" taxation could bring in annual revenues of $475 billion (although I haven't yet figure out where he gets that figure from).
In addition, Doherty cites an estimate by the Joint Committee on Taxation that tax expenditures--special tax credits and deductions--cost $873 billion in 2002. The great bulk of these went to the wealthy and privileged.
In conclusion, Doherty suggests that closing corporate tax loopholes and "taxing bads not goods," offset by a reduction in taxes on labor, would completely shift the pattern of incentives in our economy:
Such a "green tax shift" might be a fruitful area of cooperation between Libertarians and Greens:
Even for a free market anarchist, such a set of tax priorities should be preferable--as an intermediate step--to the present system. Even in the end state, arguably, some of these charges would continue to exist as part of a libertarian property system that internalized cost in price: as access fees to socially-regulated commons, or common law penalties for inflicting harm on one's neighbors. For that matter, if your free market end state is the anarcho-Georgist variant (which I recently gave my reasons for rejecting), the "land tax" is not a tax at all, but rent on common property.
But we can leave aside such theoretical matters for the time being; any world in which they're the primary issue to be resolved will, at the very least, be a much better one than ours. In the meantime, a tax on unimproved value of land is probably the least unjust tax, along with taxes that serve to internalize costs formerly pushed off on others.
Stipulating that Doherty's "green taxes" really did bring in $475 billion, imagine the appeal of substituting that revenue for an equivalent amount of personal income tax, and raising the personal exemption enough to reduce revenues by that amount! And assuming that tax expenditures really are close to a trillion $$, imagine closing those loopholes--and then raising the personal exemption, and reducing corporate income tax rates, enough to make it revnue-neutral. Not to mention ending the Drug War and translating those savings into even more income tax reductions. And shifting sales taxes, and property taxes on buildings and improvements, to taxes on site value. Overall tax rates would be lowered considerably, with taxes on productive behavior reduced still more drastically. What's not to like? Again, imagine the popular appeal.
Patrick Doherty notes that government intervention in the market insulates many prices from reflecting a wide range of externalities. He recommends a proposal by Andrew Hoemer to shift taxes onto resource use and pollution. According to Doherty, such "green shift" taxation could bring in annual revenues of $475 billion (although I haven't yet figure out where he gets that figure from).
In addition, Doherty cites an estimate by the Joint Committee on Taxation that tax expenditures--special tax credits and deductions--cost $873 billion in 2002. The great bulk of these went to the wealthy and privileged.
In conclusion, Doherty suggests that closing corporate tax loopholes and "taxing bads not goods," offset by a reduction in taxes on labor, would completely shift the pattern of incentives in our economy:
The shift toward efficiency and innovation, the shift toward work not waste, and the shift toward responsible prices instead of corrupt subsidies will usher in a new high-employment, high-wage, highly competitive and sustainable economy.
Such a "green tax shift" might be a fruitful area of cooperation between Libertarians and Greens:
Shifting taxes away from human initiative and onto monopolization of natural resources, pollution and government-granted privileges instead.
Even for a free market anarchist, such a set of tax priorities should be preferable--as an intermediate step--to the present system. Even in the end state, arguably, some of these charges would continue to exist as part of a libertarian property system that internalized cost in price: as access fees to socially-regulated commons, or common law penalties for inflicting harm on one's neighbors. For that matter, if your free market end state is the anarcho-Georgist variant (which I recently gave my reasons for rejecting), the "land tax" is not a tax at all, but rent on common property.
But we can leave aside such theoretical matters for the time being; any world in which they're the primary issue to be resolved will, at the very least, be a much better one than ours. In the meantime, a tax on unimproved value of land is probably the least unjust tax, along with taxes that serve to internalize costs formerly pushed off on others.
Stipulating that Doherty's "green taxes" really did bring in $475 billion, imagine the appeal of substituting that revenue for an equivalent amount of personal income tax, and raising the personal exemption enough to reduce revenues by that amount! And assuming that tax expenditures really are close to a trillion $$, imagine closing those loopholes--and then raising the personal exemption, and reducing corporate income tax rates, enough to make it revnue-neutral. Not to mention ending the Drug War and translating those savings into even more income tax reductions. And shifting sales taxes, and property taxes on buildings and improvements, to taxes on site value. Overall tax rates would be lowered considerably, with taxes on productive behavior reduced still more drastically. What's not to like? Again, imagine the popular appeal.
posted by Kevin Carson | 8:20 PM
8 Comments:
I don't know how realistic an incentive that is for higher earners, but I'm all for raising the personal exemption to $25-30k. If it had been indexed to inflation in 1950, it'd probably be that high anyway.
I'll stick with Adam Smith's point that the burden of taxation does not and cannot fall of the waged/salaried class - taxation just comes out of what the employers would have taken as profit anyway.
It's their state, their taxes, their welcome to do what they want with it...
Regarding green taxes, I think there is a fatal conflict of interest that will prevent them from ever really catching on.
The tax is intended to do double duty. To both raise revenue and discourage pollution. But to the extent it discourages pollution (by encouraging businesses to conserve and move to clean fuels for example) it will no longer be able to raise revenue because there won't be any pollution to tax anymore!
This isn't just theoretical. Consider that it has been suggested that California should move to a state tax on millage rather than gasoline because the state isn't raising as much money due to the rise of fuel efficient and hybrid vehicles. This in a state that contains some of the dirtiest air in the nation!! (hello Los Angeles). (Of course the millage tax unlike the gas tax is not only environmentally indifferent but also a huge invasion of privacy.)
Bill,
But at least eliminating differential tax advantages reduces the competive advantage of the most privileged large corporations, doesn't it? And cost-internalization reduces the ability of large enterprises to grow by externalizing their operating costs on everybody else.
Tros,
I certainly got a case of warm fuzzies last year when Badnarik praised the Greens for their decentralist values, and he and Cobb displayed such obvious camaraderie during the 3rd party debates. At the time, I was hoping it might be a sign of something like Rothbard's and Hess' late-60s alliance with the New Left.
joanne,
That conflict of interest is true of most vice taxes. But to the extent that cost externalization changes behavior, at least it eliminates the problems that a lot of revenue is currently wasted fixing. And to the extent that it eliminates the present diversion of human energy in irrational directions, it might also increase the average worker's standard of living--removing a pretext for the welfare state.
Green taxes are a great idea, but the question is how to calculate the damage to the environment or to citizens' health. There's the danger of preferential taxation, in which some industries, especially those with a bad reputation, are taxed higher than their actual impact, and others, especially automotive related ones or those with good lobby groups, would likely be taxed lower than their impacts. Ideally each tax should be a kind of environmental user fee, so that if the problem vanishes there really is no more need for the revenue, either. But how likely are we to be able to figure that out?
Real tax reform starts by cutting government spending. You can't get a simple, understandable, "fair" taxation system when so much needs to be fleeced out of the populace.
I also worry about cutting taxes by raising the standard deduction. It's not that I oppose cutting taxes on the poor (quite the opposite), it's that I worry that the poor will see the state as a nipple and the higher-earners as cows.
- Josh
Matthew,
You bring up some real difficulties, which I plan to address in a post sometime this week.
Pegasus,
I agree that spending needs to be reduced as part of any "tax reform." One partial way to do this is to shift as many public services as possible from general revenue funding to fee-for-service.
Cutting the standard deduction is more likely to encourage productivity by increasing the marginal return from added increments of labor.
Matthew-
the way to do it is to assign titles to the sustainable yield of the commons (in this case how much pollution can be placed in our air to act like a sink). This is in essence the same as Locke's Proviso - it is just for private enclosure so long as "enough and as good is left for others". These are sold on the open market and represent the negative externalities that today are socialized. By returning the money directly and in equal amounts to the owners of the commons - ALL of us - then we have socialized the natural benefits and opportunities of the commons rather than privatized via government granted privilege.
This is the essence of Thomas Paine's argument in "Agrarian Justice" and represents the UPHOLDING of the property rights of the excluded which today are violated because the negative externalities can only come at the expense of the fruits of their labor.
BillG (not Gates)
Paleo-Green
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