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Free Liberal: Coordinating towards higher values

Free Liberal

Coordinating towards higher values

The Environmental Benefits of the FairTax

By Paul Gessing

When thinking about pro-environment initiatives on the part of presidents, Americans generally think of Teddy Roosevelt’s creation of a national park system or perhaps Bill Clinton and his putting aside vast tracts of land in Utah for future generations. George W. Bush, of course, is not seen by most Americans as a particularly pro-environment President. In fact, many environmentalists would say that with his connections to the oil industry and desire to open the Alaska National Wildlife Refuge for drilling, that Bush is one of the least pro-environment presidents in history.

The negative view of Bush’s environmental record may be accurate in the sense that Bush has no particular affinity for the environment, but that does not mean that, as President, Bush could not have a positive impact upon the environment. The issue of tax reform, for instance, could be a “Nixon goes to China moment” (notably, Nixon, who is not known as a great environmentalist, started the EPA).

Tax reform, as the President and many in his party are advocating, could have a dramatic impact on the way Americans pay their dues to Uncle Sam. If proponents of transforming the Tax Code away from the current mess to a national retail sales tax are successful, Americans will have major economic incentives to begin treading more lightly upon mother earth.

The basic idea of tax reform among most fiscal conservatives is to create a simple replacement for the income tax that will bring enough revenue into the federal coffers to still allow the nation to pay its bills. Right now, the system is too complicated and full of loopholes to be fair and, since the federal government relies so heavily on taxes levied on income, the Tax Code creates major disincentives for work.

It doesn’t have to be that way. In fact, one of the most prominent plans is the adoption of a national retail sales tax. A sales tax as everyone knows simply allows government to take a certain percentage of the cost of each item purchased by consumers. The idea behind a national retail sales tax (nicknamed the FairTax, with more information available at www.fairtax.org) is to abolish most federal taxes including the personal income, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes federal taxes and replace them all with one sales tax of approximately 23 percent.

Now, before advocates of progressive taxes get their noses too out of joint, it should be noted that under the plans introduced in Congress (H.R. 25 and S. 25), no one would pay the aforementioned federal taxes up to the poverty line. The progressivity picture improves further based on the assumption that the wealthy buy more and purchase more expensive goods than those at middle and low income levels.

Environmentalists should be licking their chops at the possibilities the FairTax presents for creating widespread environmental improvements throughout American society. First, by levying a 23 percent tax on top of whatever sales taxes state and local governments charge (up to 10 percent in some areas), taxes on all forms of consumption will increase, thus creating major disincentives for heavy consumption. Since our nation’s consumer-driven behavior causes us to use more resources than any other society in the history of man, the opportunity to assist conservatives in creating disproportionate burdens on consumption relative to hard work and saving ought to be very attractive.

The power of the FairTax to help the environment goes far beyond just transferring the entire federal tax burden onto consumption. Under the FairTax (remember this plan has the support of some of the most conservative members of Congress including Dennis Hastert and Tom DeLay, not to mention Fed Chairman Alan Greenspan) the only time the tax is levied is on the purchase of new goods. Used items are not taxed! I can’t think of a better incentive for reuse, conservation, and the general spread of simpler living throughout this country than forcing heavy consumers to pay the heaviest taxes while creating vast new markets for used products of all varieties.

Imagine environmentalists embracing the policies of George W. Bush and Tom DeLay to put a major dent in our throw-away society! We know how hard corporations and the wealthy work and how much money they spend on lawyers to circumvent and minimize their tax burdens. Imagine if companies no longer had those perverse and wasteful incentives, but rather had incentives to make clothing, automobiles, and every other product we buy, more durable. Lastly, it must be mentioned that among the taxes absent from the list of federal taxes that would be repealed under the FairTax are excise taxes, specifically taxes on gasoline and fuel. The environmental movement has been clamoring for higher taxes on energy consumption for years. Imagine helping Tom DeLay and George W. Bush raise gas taxes by 23 percent!

Transforming the tax code may seem scary and it may not be exactly how environmentalists would choose to turn Americans away from their habits of mass consumption, but given the dominance of the Republican Party in national politics, the environmental movement would be foolish if it didn’t take a serious look at the potential for significant, positive environmental change through reforming the Tax Code. If creating major disincentives for out-of-control consumption requires working hand-in-hand with Tom DeLay, that’s a small price to pay.

Paul J. Gessing is a senior editor of the Free Liberal and sits on the Board of Directors of the Center for Liberty and Community. He works in public policy and is finishing his MBA at the University of Maryland. Paul has previously worked for the Marijuana Policy Project and for Congressman Bernie Sanders. His writings have been published in the Washington Post, Washington Times, and U.S. News & World Report.



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