The Green Tax Shift Makes Further Gains
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TAXES FOR SUSTAINABILITY
Sustainability means satisfying human needs fairly and without destroying the ecosystems that support life. The conflict between modern economies and the natural environment lies at the heart of "sustainable use of the planet." (The conflict between modern economies and "fairness" is also a huge problem, which we will take up at a later date.)How can modern economies be modified so they sustain ecosystems instead of destroying them?
Tax policies can definitely help. The basic idea is to tax the things that we don't want (such as pollution and waste), and remove taxes from the things we do want (for example, work, income and savings). Many economists have been promoting taxes on pollution for years.[1]
The idea isn't to increase taxes -- in most cases, the idea is to "shift" from one kind of tax to another kind without increasing the total tax burden. Naturally, shifting taxes onto pollution will raise the tax burden on polluters, who are often wealthy and powerful people. Thus tax shifting may cause a political fight but so does almost everything that benefits large numbers of people these days.
A new report, just published this week by Sustainable America (SA), describes 10 kinds of "environment friendly" taxes that can replace traditional taxes.[2] The new taxes provide income for government but much more importantly they provide incentives for individuals and businesses to behave in ways that protect the environment, thus harnessing "market forces" on behalf of environmental protection.
Sustainable America's 10 taxes can alleviate a broad array of environmental hazards: global warming; discharges of industrial poisons into air and water; agricultural toxicants (fertilizers and pesticides); smog created by motor vehicles; suburban sprawl and urban blight; contaminated land (so-called "brownfields"); municipal garbage; excessive use of water; destruction of forests; and depletion of fisheries. Environment-friendly taxes can help solve many important problems. Taxes don't replace other environmental policies (such as bans, precautionary actions, and regulations), they supplement them.
The SA "environment-friendly taxes" report is much more than just a traditional report -- it is an "organizer's kit" aimed at citizens who want to mount campaigns to shift over to these new taxes. The Kit gives you just about everything you would need to conduct a campaign. For each of the 10 kinds of taxes, the Kit describes:
- What is the problem that needs to be solved?
- What should be taxed to help solve it?
- Who should pay the tax?
- How should the resulting revenues be used?
- How will this tax change peoples' behavior?
- How will individuals and communities be affected?
- Who is using these policies today?
- Where can you get more information?
Here is a brief discussion of some of these "taxes for sustainability":
LAND VALUE TAX TO DISCOURAGE SPRAWL
Urban sprawl destroys natural areas, paves over farm land, eats up scarce open space, increases commuter traffic and air pollution, isolates the poor in city centers, decreases the urban tax base, reduces the jobs available to city residents, increases the number of vacant or abandoned lots and buildings in cities, destroys the traditional sense of community found in urban neighborhoods, and increases the tax burden on suburban residents. To revitalize our cities, and reduce automobile pollution, we need to curb sprawl.[3]
The movement of people out of cities and into suburbs is being promoted by many public policies. For example, governments subsidize automobile travel (by paying for highways, traffic control, law enforcement, parking, effects on public health, and more). The Federal Housing Administration's (FHA) rules have favored lending for single-family dwellings (suburban) but not for multi-family units (city). FHA rules have also made it cheaper to buy a new home (suburbs) than to renovate an older one (city). Federal tax deductions for home mortgage interest subsidize homeowners (suburbs) over renters (city). As suburban development drives up the price of farmland in the suburbs, inheritance taxes may force the children of farmers to sell the farm just to pay the taxes. To revitalize cities and prevent destructive sprawl, each of these subsidies to the suburbs should be reduced or terminated.
But that is not all. SA suggests that the property tax could be shifted in an interesting way to reduce the incentives for sprawl. If the property tax were taken off of urban buildings and focused on the land beneath the buildings, this would penalize land speculation and would reward people who built on their land. Land speculators hold land undeveloped, hoping to earn a higher price in the future. This promotes "leap frog" development out of the city and into the surrounding countryside. The proposed shift from traditional property tax to "land value tax" would penalize land speculation and encourage urban development. Removing (or reducing) the tax on buildings makes them cheaper to construct and operate, and more affordable to buy or rent. Urban construction creates urban jobs.
As things stand now, as urban buildings decay, owners often don't make repairs because their property tax will rise. Thus the typical property tax creates an incentive toward suburban sprawl and urban decay. Shifting the property tax from buildings onto land reverses these incentives.
Taxing land more than buildings will reduce taxes for homeowners. Land speculators, on the other hand, will see their taxes rise. And there are other benefits. According to the Henry George Foundation in Columbia, Maryland, the city of Harrisburg, Pennsylvania has shifted from a traditional property tax to a "land value tax" system. There used to be 4200 abandoned structures in Harrisburg, and now there are 500 because now no one is penalized for repairing an old building. (See www.urbantools.org/ ).
There can be one major drawback to this property tax shift: it could create an incentive to build on open spaces and ecologically sensitive areas, so these areas will need to be vigorously protected by zoning and by the establishment of strict urban growth boundaries, such as have been enacted in cities like Portland, Oregon. But of course such areas need protection under the present property tax system, too.
Taxes on Pollution and Waste
The other 9 kinds of taxes advocated by Sustainable America will be more familiar to many people -- a tax on carbon in fuels; a tax on motor vehicle emissions; a tax on industrial pollution discharges into air and water; a tax on municipal solid waste; a tax on fertilizers and pesticides; a tax on cut timber; a tax on wasteful uses of water (irrigation, and hydroelectric power); and a tax on harvested fish.
In each case, the main aim and effect is to discourage an activity that poisons the earth or that diminishes the earth's capacity to provide an ongoing stream of benefits to us and to future generations.
The SA ORGANIZER KIT has been very thoughtfully done. When there are reasons to believe that a particular tax will have regressive effects (penalizing the poor, for example), the KIT says so and suggests remedies. If a tax has not been tried in many locales, so that the outcomes are not well understood, the KIT says so.
This ORGANIZER KIT makes a substantial contribution toward translating "sustainability" into public policies that people can advocate in their communities and at the state level. There's a lot to chew on here. Good chewing, too.
[2] Elaine Gross, ENVIRONMENT-FRIENDLY TAXES ORGANIZER KIT (New York: Sustainable America, 1999). Sustainable America, 42 Broadway, Suite 1740, New York, N.Y. 10004-1617. Tel. (212) 269-9550. Fax: (212) 269-9557. E-mail: sustamer@sanetwork.org. Web: www.sanetwork.org. In the interest of full disclosure, I should mention that my name is listed on the title page as one of the authors of the ORGANIZER KIT.--P.M.
[3] See http://www.sierraclub.org/sprawl/report98/ and http://- www.sierraclub.org/sprawl/report99/.
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Rachel's Environment & Health Weekly is published by the Environmental Research Foundation, P.O. Box 5036, Annapolis, MD 21403. Fax (410) 263-8944; E-mail: erf@rachel.org . And visit http://www.rachel.org on the WWW.
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