With April 15 fast approaching, I thought I'd do a post on taxes.
As a progressive, I believe that a certain level of taxation is both reasonable and necessary. It's just the investment we all make to live in a democracy. Roads, bridges, schools, national defense, (and national health care!), benefit us all but require that we all chip in our fair share.
At the same time, I accept the argument that "whatever you tax you get less of." It makes sense of course -- the more things cost, the less of it you can buy and taxes raise the cost of things. As a result, beyond a certain base level it does not make a whole lot of sense to tax income, because, we generally want more income and more employment not less.
In the public debate over tax policy, Republicans bang out a constant drum beat of no taxes, no taxes, no taxes. It's childish and irresponsible (which is why they haven't done a good job with governing). But Democrats, it seems to me, too often get run over because they are just standing still on taxes -- defending the status quo or offering a watered down version of the Republican drumbeat.
It's time for Democrats to go on offense on taxes at the federal, state, and local level. If Democrats could go on offense on taxes, I believe they could usher in several decades of electoral dominance. What would it look like for Democrats to go on offense on taxes? In a sentence:
Whatever we tax we get less of right? So tax the hell out of things we don't like -- toxics, any form of pollution, and any non-renewable resource. For every $1 raised by taxing toxics, Democrats could invest in new technologies to destroy old polluting industries. These new investments would create new high paying jobs and put the United States on a course of continuous improvement in our quality of life. It would basically fund an industrial policy in perpetuity -- 1) kill old and dirty industries through taxing their waste stream; 2) replace with new non-toxic technologies; 3) sell to the world.
Lester Brown at the Earth Policy Institute has proposed that we use taxes on toxics and other forms of pollution to lower income taxes. To a point, I think that's a good idea and a wonderful way to build popular support. But I also think it has its limits. We don't want government to become addicted to the revenue it gets from toxic taxes. For example, the U.S. currently has a policy of using revenue from timber sales to fund schools in the northwest. The policy is a disaster -- basically requiring the clear cutting of forests in order to keep schools open. It seems to me wiser to use toxic taxes as a tool to destroy dirty polluting industries rather than as a source of funding for basic services.
Not all toxics are appropriate for taxation. Some toxics like mercury, are so detrimental even in small quantities, that they should just be banned completely. But in other cases, the tax would effectively function as a gradual ban. Lester Brown writes, "we propose a worldwide carbon tax to be phased in at $20 per ton each year between 2008 and 2020, stabilizing at $240 per ton." A typical coal-fired power plant generates 3,700,000 tons of carbon dioxide a year -- and the old coal-fired power plants spew even more. At even $20 a ton, in the absence of pollution controls, the typical coal-fired power plant would be facing $74,000,000 in taxes a year (just on the CO2 -- we could also tax the sulfur dioxide, nitrogen oxide etc.) and the older plants would quickly be out of business. We could take every dollar of that tax and invest in solar, wind, and geothermal for example -- quickly replacing our old industry infrastructure with new clean technologies.
We could also tax plastics, pesticides, mercury in those funky new lightbulbs, toxics in household products, non-sustainably farmed lumber... the list goes on and on. Presently, pollution puts profits in the hands of corporations while passing huge health care costs onto the public sector. Taxing the heck out of toxics and other forms of pollution would dramatically lower health care costs, reduce government costs, and improve quality of life for all Americans. In fact, it's not even really a tax increase, it's just putting the true costs of pollution back on the companies that create it, rather than sticking you and me (and the public sector) with the bill.
The fact that Democrats haven't already embraced this idea shows just how much power the old polluting industries and their lobbyist dollars have in Washington.
But taxing toxics (and other forms of pollution) is an idea whose time will come.