Each percentage point of Stuff Tax has been estimated to raise 0.4 percent of GDP, or $50 billion. A 20 percent Stuff Tax could therefore raise $1 trillion. That is equivalent to the income tax the federal government collects from all but 0.5 percent of Americans. Configured another way, a Stuff Tax would enable us to reduce employment tax by 50 percent, abolish income tax for 95 percent of Americans, and still come out ahead. Which do we value more, work or stuff?
Yes, a Stuff Tax would take a bite out of consumption initially. But that needs to happen anyway -- with consumption at 70 percent of GDP, we are completely addicted. Shifting taxes from production to consumption would help wean us from that addiction, spur new sectors of growth, and create a more diversified, and stable, national economy.
And the benefit to the environment? Creating stuff involves environmental costs- of extraction and pollution -- that are currently unaccounted for. Although it is a coarse tool, a Stuff Tax could acknowledge those externalities (similar to a Pigouvian Tax) and fund the appropriate mitigation. As we learn more, the Stuff Tax could be varied based on the impact that product or service has on the environment -- gas would carry a higher tax, for example, than birdseed.
A Stuff Tax will not solve all of our problems. But it would hold us all responsible for what we consume, encourage employment and nudge our economy in the right direction. Until then, Uncle Sam will keep earning his dime by taxing employment and work -- both the hairdresser who bikes to work and the hedge fund manager with two power boats and a private jet.
And that does not help our budget, our unemployed or our environment.
Stephen Linaweaver is an associate principal at GreenOrder, an LRN company. GreenOrder is a strategy and management consulting firm that helps companies achieve competitive advantage through environmental innovation. GreenOrder Senior Analyst Brad Bate contributed to this article.
Top image CC licensed by Flickr user jeff kung. Inset images CC licensed by wikimedia user Torsten Bolten, Flickr user Draco2008 and sxc user arthausen8.
www.FairTax.org
I like the "Fair Tax". It saves us lots of money by abolishing the IRS bureaucracy, saves us lots of time and money spent on filling out our taxes and related paperwork, gets rid of all the special interest loop holes, taxes imported goods just as much as US made (unlike income/employment/corporate taxes), and is simple. It is NOT regressive because all the taxes paid up to the poverty line are refunded upfront. Its biggest problem is that all the DC lobbyists hate it because most of them would become unemployed.
Check it out:
http://www.fairtax.org/site/PageServer?pagename=about_main
From One Pocket to the Other
An idealistic solution with several obvious fundamental flaws.
Our government is no more thrifty than our citizens. Giving more tax money to a less-than-frugal government doesn't seem sensible. Perhaps we should tax the government's spending!
Are you talking about
Are you talking about something akin to a "sin tax" like taxes on tobacco products - the idea being that people will be requre, to pay higher taxes on products whose production or use contribute to climate change, and that therefore they will be less likely to purchase or use these products.
Cigarettes have been taxed highly for years and people still smoke.
It is a good idea
It is similar to the Fair Tax, that has been proposed (and made famous during the GOP 2008 presidential primaries by Gov. Huckabee).
It is a wonderful idea whose
It is a wonderful idea whose time is long overdue.
As for the colonist's disingenuous claims of "taxation without representation", they simply did not want to pay taxes period, regardless of representation. Two thirds of the colonists were either pro-British or neutral at the start of the war.
What if there had been no revolution? There would have instead been one enourmous British North America. There would have been no war of 1812. The British ended slavery in 1834, so there would have been no civil war. The "Americans" would have entered "The Great War" along with the rest of the empire in 1914 and would have contributed to an earlier conclusion.
The enlightment would have continued unabated and we would have been like Canada. Imagine how horrible that would have been!
A Transaction Tax
Why not go all the way. This is a proposal I've been sending out to various sites. Comments are welcome.
A TRANSACTION TAX
Why not a single, easily administered, non-regressive tax?
It can be done, and undoubtedly will be done. The question, really, is when?
The Federal Government could replace its entire system of taxation with a levy on all transfers of value. The actual percentage rate would be quite small—one percent or less—because all transactions would be subject to this tax.*
There would be no income tax, no import taxes, no other federal taxes of any kind (and this could be the first step in the elimination of all taxes—state and local as well as federal).
The tax would be levied on stock purchases and dividend distributions; wages; inheritances; retail and wholesale purchases; interest; property purchases, etc. In other words, any time there is a transfer of value, the federal tax would be applied to the amount of the transfer.
Apportionment of federal revenues would then be made to the states and local governments on the basis of population, and inversely to the amount of local taxes levied. Those state and local governments with higher taxes would receive less federal revenue. State and local governments would gain the most by not levying any taxes and therefore not incurring collection costs.
Collection would be simplified, since it would work like the collection of existing excise, sales and value-added taxes. The only way individuals or corporations could legally avoid the tax would be by not spending, or in any way using, any wealth in their possession. And there would be an additional advantage to the tax. The smaller the transaction, the less temptation there would be to avoid paying the tax, while the larger the transaction, the more difficult it would be to avoid paying it.
The tax would be non-regressive in that there would be no tax shelters, no deductions, no loopholes. Under a barter system, this form of taxation would be difficult, though not impossible. In a cash economy it becomes much easier to enforce. In a cyber-based economy, collection would be easily computerized and would be virtually automatic.
*EXCEPTION: For obvious reasons, an exception and the ONLY exception to the “transfer of value” rule would be the tax collection, itself.