I think this is going to be my fiscal policy mantra from now on.

I feel like I’m rarely in agreement with economic orthodoxy — but yeah, wouldn’t economists tend to agree with me on this point? Why should I pay tax on *my* income — value which I have added — when I could be paying a tax on value which I have consumed or depleted in some way, via pollution for example?

Like I said in my previous post, value ultimately comes from the biosphere rather than from human industry. If we want better environmental outcomes, we should recognize this. Fiscal policy-wise that means the government should tax our consumption of natural value (i.e. natural resources) rather than taxing value added via human industry. That way we have an incentive to actually use less, which we clearly need to do.

In related news, I am officially in love (or intense like) with Herman Daly from whom I took this idea. I also dig the folks over at the Center for the Advancement of the Steady State Economy.


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5 Responses to “TAX BADS NOT GOODS”

  1. William Bruntrager Says:

    It’s Cinco de Mayo! Happy Birthday.

    I find it difficult to object to the principle which you identify. The rub is who gets to define what are goods and bads (Hint: Why are lobbyists so well-paid?).

    Sadly, that flaw may be fatal, which is why my personal favorite is still the idea everyone loves to hate, viz. the flat tax.

  2. tripinchina Says:

    In a democracy, “the people” would be the ones who define bads vs. goods. It’s a nice idea anyway…

    As far as your flat tax, I’ve been opposed to that since, what, middle school? That leaves me pretty deeply entrenched at this point. But yeah, who knows?

  3. William Bruntrager Says:

    In a democracy, “the people” would be the ones who define bads vs. goods.

    Good one. I guess it’s comedy hour over here at tripinbrooklyn.

  4. David Says:

    Yeah, the problem unfortunately is that the Canadian Liberal Party proposed that basic plan in the last election, to lower income tax and make up the difference by taxing carbon emissions. Stephane Dion boiled the argument down to “let’s tax things we want to discourage, and lower taxes on things we want to encourage.” This was the central issue in their platform. They got beaten so historically in the election that Dion lost his job. The lesson I learned is that people by and large aren’t willing to be told that macro-economics are that easy to understand.

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