Al Gore's Policy Proposal

Discussion in 'Politics & Law' started by nanite1018, May 28, 2007.

  1. nanite1018

    nanite1018 Registered Member

    I watched Al Gore on Larry King on Saturday (a rerun of Tuesdays show). He seemed to do great up until he said this:

    "I think we ought to eliminate the taxes on employment, the payroll taxes that discourage jobs and make it up dollar for dollar -- no tax increase, revenue neutral. Eliminate the payroll tax and make it up dollar for dollar with pollution taxes, principally C02 taxes and, yes, that would raise the price of gasoline but it would come back to the American people in the form of sharply reduced taxes on payrolls. And for those places where there was a difficult adjustment, make special provisions there because you would have the money to do it."

    That means eliminate all social security and medicare taxes, as well as all federal income tax, and replace it with pollution taxes. Wow.

    So, has he gone off the deep end? I don't know. But I was thinking about this proposal, and I think it is at the very least an interesting proposal. The pollution taxes could be levied on all imports as well, and so goods from China manufactured in terrible conditions with very dirty coal energy would cost more, and we probably wouldn't buy them. This would cause severe pain for the Chinese economy, and probably force them to clean up their act. American manufacturers would have to get a lot cleaner, and there would be strong market incentives to do so, therefore enabling a rapid transition to a green economy with green energy. So it would do what is necessary to fix things, at least as far as I can see.

    But it would take a lot of tax burden off the wealthy and shove it on the middle class. Probably not the poor because the minimum wage could easily be set as a "living wage", i.e. the amount it would take a family of four to be at poverty level, which would be defined as the amount of money required to meet basic needs, and since costs of goods would increase, the poverty level would rise, and thus so would the minimum wage. So poor people wouldn't be hurt much. But the middle class would now take the brunt of the tax burden, while the rich would have little tax burden at all.

    So what do you think? Is it even workable? Might the problem of redistributed tax burden be fixed with wealth and capital gains taxes? I don't know, but it is at the very least interesting.

    Let the raucous debate begin!

  2. CMK_Eagle

    CMK_Eagle Registered Member

    Yes, he has, but not here. It would actually shift the tax burden away from the poor (though I'm not sure about secondary effects) since payroll taxes actually hit the poor harder than the wealthy. However, from an environmental standpoint it's only better if you think the way to go green is to punish businesses. Pollution could be cut further, or for less money, if emissions permits were auctioned in a cap-and-trade scheme.
  3. nanite1018

    nanite1018 Registered Member

    Well, it would cause the prices of basic goods such as gasoline, electricity, and food products to increase. So it would hit them. But, the wealthy would be paying significantly less. So, someone has to make up the slack.

    His method would put directly into the market the cost of pollution and the negative environmental effects of our goods, therefore setting up market processes to fix the problem.
  4. CMK_Eagle

    CMK_Eagle Registered Member

    How would the wealthy be paying significantly less? Social Security tax is paid only on the first ~$100,000, so the top earners only pay tax on a fraction of their income, while the poor and middle class pay on all of their income. I could be wrong, but my understanding is that most payroll taxes work in a similar way.

    It would, but my issue with a pollution tax is that it wouldn't allow for emissions to be cut in the most efficient way possible. Nor would it be the best way to determine the actual cost of pollution. What tax rate per ton of carbon would bring emissions down to an acceptable level? A cap-and-trade scheme, however, would set the level of pollution, and credits for that quantity could then be sold or auctioned, and then traded amongst companies so that the deepest cuts could come from those industries most able to make them.

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