Environmental Tax Shift
|May 14, 2002||Posted by Staff under Progress Report, The Progress Report|
Green Economic Policy
Currently, taxes are a destructive nuisance that penalize workers and distort economic decisionmaking. Using common sense, many nations are starting to improve their tax structures by reducing taxes on production and drawing more revenue from pollution, sprawl, monopoly and special privilege instead.
Here are some excerpts from an article appearing in E, the Environmental Magazine.
The environmental tax shift
by Damon Franz
Nobody loves tax time. It’s a stinging reminder that the government can take your hard-earned dollars and spend them on activities you object to, like urban sprawl and below-cost timber sales on public land.
As if that weren’t enough, there’s the harsh reality that while you’re diligently filing your W-4, many of the industries you most adamantly oppose — oil, mining and timber, for instance — are getting tax breaks. But it doesn’t have to be that way.
A new concept based on simple economic principles holds the possibility not only of reducing the tax burden on working people, but of increasing environmental protection without harming the economy. The concept is called the “environmental tax shift,” and it couldn’t be simpler. By raising taxes on things we want less of — like pollution and waste — we’re able to cut taxes on working men and women.
In this way, the country can simultaneously strengthen its economy, clean its air and water, and ease the tax burden on the working class. “It’s not a revolutionary idea to tax activities that have a social cost borne by others,” said Henry J. Aaron, a senior fellow in economics at the Brookings Institution, a public policy center. “Economists think those are the best kind of taxes.”
Lots of others agree. “Taxing — even incompletely — the society-wide drip and hiss of pollution would allow governments to slash charges on profits and paychecks, charges that sap enterprise and work,” said the group Northwest Environment Watch in its book This Place on Earth 2001.
Sound like a fantasy? In the United States, that’s exactly what it is. Although efforts to study or implement modest environmental tax shifts have cropped up in a handful of state legislatures in recent years, none have seen much success.
[The Progress Report interjects -- that is not quite accurate. The property tax shift, originally conceived by the first tax shift economist, has been making very good progress in Pennsylvania, Virginia and other states. Try this introduction to the topic and see where it has worked.]
Elsewhere in the world, however, the concept has been spreading rapidly. Nine Western European countries have implemented environmental tax shifts recently, mostly as a means to reduce air pollutants like sulfur dioxide and carbon dioxide, the global warming culprit. And some have gone even further, using the concept to fight waste by taxing landfill space or to encourage conservation by taxing electricity and water. However, all returned the savings to the economy by cutting personal income taxes, social security, or both.
So far the experiment has been successful, said J. Andrew Hoerner, director of research for the Center for a Sustainable Economy. “In 44 economic studies of environmental tax reform in Europe, we basically concluded that the impact on the Gross Domestic Product is positive, the impact on employment is positive, and the effect on emissions is to reduce them,” said Hoerner.
Northwest Environment Watch founder Alan Thein Durning says “This campaign involves a lot of planting seeds and a lot of waiting,” adding that in a crisis, officials will have to look to a tax shift for new sources of revenue. “I believe the biggest obstacles to an environmental tax shift are ignorance and force of habit,” he said.
Damon Franz, a former E intern, is a writer and editor at Greenwire in Washington, D.C.
For lots more information, visit the Green Tax Shift Headquarters
and the Green Economics Resource Center
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