Thursday, February 21, 2008

A Green Tax System

An idea presented by Paul Hawken about transitioning to green fees as opposed to income, payroll and corporate taxes.

"If we were to incrementally replace over a twenty-year period all government revenues ($1.25 trillion), including the deficit amount of the budget that is not collected ($264 billion), through the use of fees on products and processes, we would be adding 5 percent of the total, or $76 billion a year (thereafter adjusted annually for inflation and budget increases). The annual fees and taxes on virgin resources, emissions, fuels, products, wastes, rights, and services would equal about 1.2 percent of the Gross Domestic Product. At the same time, the same $76 billion per year, also adjusted annually for inflation, would be lopped off present income and payroll taxes, both individual and corporate. At the end of the period, most government revenues would be derived from green taxes, virtually none from income, payroll, or corporate taxes. Of course, people may still wish to levy a surcharge on high income individuals and companies. But we would nonetheless have consistently and steadily shifted the tax burden from income and entrepreneurial activity to those activities we wish to discourage, thereby transforming the economy. The resulting changes in the marketplace this would cause would be dramatic. Every purchase would become more constructive and less destructive. Equally important, the innate instinct to save money would reward both the customer and the environment.

The whole key to redesigning the economy is to shift incrementally most if not all the taxes presently derived from “goods” to “bads,” from income and payroll taxes to taxes on pollution, environmental degradation, and nonrenewable energy consumption. Because green taxes are incorporated into the price a company or customer pays for a resource, product, or service, they create powerful incentives to revise and constantly improve methods of production, distribution, and consumption, as well as a means to reconsider our wants and needs. The purpose of a green tax is to give people and companies positive incentives to avoid them."

1 comment:

xtrachromosomeconservative said...

i don't think you could affect that type of change in the near term. i agree with the general notion of trying to tax bads instead of goods, however, the basic problem with doing this on a large scale is you place most taxation on consumption which can be deeply regressive. In the near term I believe we should make some significant changes that would shift the incentives away from certain types of consumption. For example- the mortgage interest deduction is positively silly. Ostensibly it enables all to share in the American Dream of owning a house but the benefits skew overwhelmingly to the rich, have encouraged overinvestment in the housing sector for which we are paying dearly, and encourages the degradation of the environment. We can implement a revenue neutral carbon tax that would offset payroll taxes for lower income folks. We can start to shift federal subsidies away from highway transportation and focus on rail, metro, and light rail.