It's been a few weeks since Al Gore give his speech proposing to replace the payroll tax with a pollution tax. I never did see a clear outline of this idea; what does "payroll tax" mean, exactly? And what would the taxes amount to? So I decided to work out the details.
I assumed that, rather than "payroll taxes", the program should eliminate the entire income tax. I also took the position that expeditures should be covered, not just receipts; no more deficit. On the other end of the equation, I chose to go for a single tax, a tax on carbon. The details are below. Suffice it to say that it comes to $3.19 per gallon of gas. Or, somewhere between $600 and $1,000 on a ton of coal (depending on how much carbon is in it). Or, 6.2 cents per cubic foot of natural gas (? - not sure about the calculation).
More below the fold:
So, the question is - are you willing to pay an extra $3.19 at the pump to eliminate your income tax? Note that this includes Social Security & Medicare, which is not 7.6%, but 15.2%; your employer is also paying into it. (Also note that that SS is very regressive). Note also that neither the ultrarich nor corporations will pay income taxes any more.
I want to emphasize that the tax would not be taken at the pump, but rather at the source; when it's pumped out of the ground, or brought in on ship, or whatever. NOT a retail tax.
Expect broad impacts from such a change. (Really? Who'da thunk it?) Yet these impacts would be trivial compared to the catastrophic global heat death that's unfolding right now. I'll touch on a few, but feel free to add your own estimations.
Some things which would become more expensive.
- transportation. I assume that trucking is less efficient than trains. Distances become more important, as well. Food transported long distances also becomes more expensive. And expect the price of stamps to go UP, UP, UP. (Less junk mail? Yay!)
- commuting.
- large, heavy personal vehicles.
- the manufacture of large, heavy personal vehicles
- electricity from power plants using fossil fuels
- plastics
- fertilizers, pesticides (and thus, conventional farming)
- war
Some things which are not affected, or less affected
- locally-grown food
- organically-grown food
- nuclear, wind, hydro, solar, and geothermal power
For those who are concerned about this having an adverse effect on the poor, I suggest a flat outright payment to every legal adult resident (similar to a previous diary I did on this subject), to mitigate the effect. This would, of course, mean a higher tax on carbon. That diary also speaks to addressing effects on trade.
And, of course, the most important effect of this change would be a reduction in the amount of CO2 going into the atmosphere.
CRUNCHING THE NUMBERS
I chose 2003, because it was the last year I could find workable numbers.
2003 carbon consumption: 1,561 teragrams of carbon (tera = 10^12) Link here See the very last value
2003 Total expenditures: $2,156 billion. Link here see Fiscal Year Totals, Outlay, FY2003
grams/lb: 453.5924
lbs/gal: 5.8 to 6.5. I chose to use 6.
1 gallon of gasoline is 85% carbon
Carbon tax required to replace all other taxes:
(2.156 * 10^12 dollars annual spending) / ( 1.561 * 10^15 grams carbon annual consumption) = $0.00138 / gram
Tax on 1 gallon:
($0.00138/gram * 6 lbs/gallon * 453.59 grams/lb) * .85 = $3.19/gallon
And if you see where my numbers are out of whack, please let me know.
P.S. Do not be a dope and forget your tags. I had to do this whole thing over again because I neglected to put any in the first time.