Brainstorming AL Gore's Proposal to Abolish Payroll Tax.

[elehhhhna]

Our President-in-Exile has suggested we abolish payroll taxes and replace them with taxes on companies which emit CO2, which would boost our economy and incent polluters to cut emissions. Original info speech, here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=2164357&mesg_id=2164357

This thread is dedicated to listing the benefits that would result from the abolition of payroll taxes. If you have Q's or doubts about taxing CO2 polluters, please read the above linked thread and post them there.

Benefit: Immediate, dramatic increase in personal disposable income.

Your turn.

[Radical Activist]

1. It places the tax burden where it belongs

On those who have the most wealth and are using it in a way that harms society, rather than those who make the least money.

[Dora]

2. We should anticipate how industry will respond, and formulate rebuttals.

I'm all for Gore's idea.

And if corporations don't like it, they can take steps to reduce/eliminate CO2 emissions. As individual taxpayers, we have no such options. The only way we have to reduce our tax is to stop working.

[HamdenRice]

3. Yes and no

I have a couple of provisos concerning Al Gore's suggestion for the replacement of payroll taxes with carbon taxes.

First, I don't think the reform should be revenue neutral with respect to the current tax burden. Taxes are historically low, especially on the wealthy, and we simply cannot afford our current federal liabilities with our current federal revenue stream. Taxes overall will have to be increased at least to their level during the Clinton administration, if not higher, simply because of the fantastic deficits of the last few years.

A carbon tax cannot generate the necessary revenue. Instead, payroll taxes need to be replaced with steeply progressive income taxes. In fact, the entire bogus social security/medicare debate is premised on the ludicrous notion that income taxes can never be used to meet liabilities currently being met by payroll taxes. Once you get rid of that idea, there is and never has been a crisis in social security or medicaid liabilities. We should just bite the bullet.

Given medicare's role in the bogus crisis, we might as well combine reformed financing of social security and medicare with the vast savings to be realized through comprehensive health care reform -- obviously, single payer, universal national health care.

Those are fairly progressive-left proposals. Now here are some ideas that were generated from the right (really neo-liberals, not conservatives) that over time I have come to accept as neither left nor right, but essentially just technically correct.

Any carbon tax should be tradeable. Despite progressive opposition, the implementation of tradeable pollution fees and credits does help reduce pollution more quickly. That's because it incentivizes those who are able to reduce pollution quickly, because it enables them to get a reward for their pollution amelioration. The same should be true of carbon tax burdens. Moreover, carbon taxes should not be universal, but allocated by sector. For example, I can reduce my driving without having a drastic impact on my health, but I cannot reduce my home heating oil costs during a bad winter. The same applies to industries. Some can reduce their carbon footprint more easily than others.

Finally, and this is the most counter intuitive, we need to abolish corporate taxes, combining that initiative with steep increases in personal income taxes on the wealthy. That's because corporate taxes are really an illusion -- a collection service for individual taxes. In fact, corporate taxes are the biggest rip off of middle class and working class people, their tax free pensions savings, and non-profit institutions, and are a boondogle for the rich. Rich people love the coporate tax/dividend tax/capital gains tax charade. All corporations are pass through entities. Tax the underlying stakeholders -- wealthy investors and investment institutions, pension funds, and non-profit endowments -- directly at their respective tax levels.

Right now, your pension fund or 401K is subsidizing some greedy rich person because of the corporate tax system.

[elehhhhna]

4. Ham, as usual your ideas are dead-on, insightful, and well presented

Please repost that as its own thread. It's too good to NOT read.

So indulge me here--what benefit/s so you forsee if, say, we abolish personal fed taxes on earned income (i.e., ssi/medicare contributions were still employee paid)?

[RB TexLa]

5. Progressively on how much they emit?

So a company that emits say 300,000 units of pollution with revenue of say $1B would have the same tax burden as a company that emits 300,000 units of pollution with revenues of $9B. If the company that has revenue of $9B sees a reduction in their tax burden, wouldn't they have an incentive to take on the manufacturing of some of the products that produce more pollution to a point that would still be under their tax burden under the old system? Wouldn't this just spread the production of products that produce pollution to more companies that are currently low pollution producers as they would be able to take the pollution tax and still lower their tax burden and thusly increase their profits?

[elehhhhna]

6. Huh?

"So a company that emits say 300,000 units of pollution with revenue of say $1B would have the same tax burden as a company that emits 300,000 units of pollution with revenues of $9B."

Where did this come from? Gore said the details must be left to Congress, national debate,expert input, etc.