Americans love to gripe about paying their taxes, and April 15 is both a day of national dread and the butt of a thousand bad jokes. But the same people who crowd local town halls to complain about a minuscule jump in their mill rates are quick to change the channel when they happen across a discussion of tax policy.
Let's face it, taxes are a boring subject. As Alan Thein Durning notes in this issue's "Conversations," the manner in which we assess them--with an increasing reliance on unfair payroll taxes--appears set in stone. But the fact is that the Founding Fathers had nothing to do with imposition of the income tax. It is less than a century old, and its introduction was accompanied by a rigorous debate about what should be taxed, and who should pay.
Environmental tax shifting is an idea that is gaining momentum though, in the U.S. at least, it has yet to have a deep impact on either state or federal legislatures. But the notion that we should tax "waste, not work" has already made significant progress in Europe. In Finland, the first European country to impose a tax on the carbon dioxide (CO2) emissions that cause global warming, environmental officials say consumers and industry alike have been given a strong incentive to switch to cleaner fuels. And in Norway, it's estimated that a similar law could reduce CO2 levels by two million metric tons per year.
Americans are only five percent of the world's population yet we consume 25 percent of its shrinking supply of fossil fuels. Oil prices that are the lowest in 50 years have encouraged our wasteful ways, and sparked fad purchases of gas-guzzling sport-utility vehicles (SUVs), which can spew five times as much CO2 as the average compact.
Stanford economist Lawrence Goulder calls pollution taxes "corrective taxes," because they force business to recognize the true cost of the natural resources they extract and deplete. Right now, our economy looks favorably on polluters, because the stimulus is twofold: First, they create work in drilling for oil or mining coal, then they offer more employment to clean up the mess they made.
Friends of the Earth reported last December that tax breaks for polluting industries will cost taxpayers a whopping $17.8 billion over the next five years, a $2.5 billion increase from the last time the organization ran the numbers. Timber companies, seemingly intent in cutting the last of our old-growth forests, will get $900 million in subsidies. Mining companies, many of them operating on public land, stand to rake in $1.9 billion. In the face of rising economic pressures on working families, that's an outrage. "We cannot allow the continued rape of the land by polluters who would deplete our forests, scar our public lands, pollute our air and water and then have the tax code subsidize their destruction," says Representative Pete Stark (D-CA).
The great thing about tax shifting is that it's revenue-neutral. "Bad" taxes are replaced with "good" taxes, creating a positive ripple effect. Increase the cost of the fuel sold by Exxon/Mobil and watch Americans turn down their thermostats, cut down on unnecessary driving, and sell their SUVs.
