Environmental Tax Reform Meetings
"Tax shifting" is a big deal, and two events recently held in Washington, D.C. show just how significant this movement has become.
On April 6, a strategy session on "Promoting a Sustainable Economy through the Tax Code" was hosted by the Center for a Sustainable Economy (CSE). CSE was founded in 1996 by Dawn Erlandson, formerly director of tax policy for Friends of the Earth. On Ap ril 7, a National Symposium on Tax Shifting was hosted by Redefining Progress. Redefining Progress was founded in 1994.
These events were each attended by roughly 75 people and highlight the growing attention being paid to environmental tax reform. Energy taxes, taxes on carbon emissions, water effluent charges, etc., have been discussed for decades, but only during the l ast six years have these ideas been advocated within the context of a "tax shift." A shift of tax burdens onto natural resource use and away from labor and/or capital impresses many environmentalists and economists as a win-win proposal. Slogans such as the Banneker Center for Economic Justice's "TAX BADS NOT GOODS" and Redefining Progress' "Tax Waste Not Work" find agreement with large sections of the population.
Within the environmental movement, tax shifting is being regarded increasingly as a potential source of new advances in conservation and sustainability. Several European countries have already put significant tax shifts in place -- Sweden leads the way i n this regard -- and many smaller tax shifts have been attempted by local government units in the United States and elsewhere.
The earliest explicit call for such a shift in tax burdens, away from labor and capital, and toward environmental privileges, was made in 1879 by economist Henry George. George, regarded by many as the first Green economist, spent his life promoting tax shifts and saw many of his ideas adopted in Australia, New Zealand, parts of the United States and elsewhere.
During the two Washington events, some 27 speakers told of their research findings and campaign experiences with regard to tax shifting. Particularly interesting were advocates from Minnesota and Vermont who related real-life stories from their tax shift campaigns which are progressing in those states.
Near the root of the tax shift concept is a principle called "polluter pays," which states simply that he who pollutes the environment ought to bear the responsibility of cleaning it up. When cleanup costs are pushed onto the shoulders of the taxpaying p ublic instead, economic distortion results and the environment suffers. This idea can be regarded as a corollary of a fundamental principle of economic justice, that what you produce is yours -- produce wealth and the benefit should belong to you, or produce pollution and the burden of that should be your responsibility.
Andrew Hoerner, of the Center for a Sustainable Economy, mentioned that the Polluter Pays principle can be justified from either of two angles -- it is needed for economic efficiency, and it is morally wrong to neglect it. It would seem that the environm entalists for whom economic efficiency carries great weight have lined up in support of tax shifting; but the constituency that sees the Polluter Pays principle as a moral imperative, even if it were not economically optimal, has not yet been sufficiently alerted, informed or approached.
Of several new publications unveiled at the April 6-7 events, the most noteworthy is a booklet titled simply Tax Shift, published by Northwest Environment Watch of Seattle, Washington. This friendly, readable volume analyzes the potential impacts of a t ax shift in the Northwestern United States and British Columbia, and finds enormous potential for economic benefits through taxing "bads" more and "goods" less.
An exciting part of the plan in Tax Shift is a shift in property taxes from being levied, as at present, on land values and improvement values together, to a property tax on land values only. Land value taxes carry no deadweight loss (for more details on
deadweight losses, see The Losses of Nations, by Fred Harrison et al., 1998), as pointed out by Nobel Laureate William Vickrey; the booklet dubs land value taxation a "sprawl tax" and perceptively notes
that it would "turbocharge existing growth management plans, encouraging
full development in urban and suburban centers, along with more compact
development elsewhere in cities" (p. 64).