vt green tax shift & common asset fund dec. 7, 2004 uvm green tax course
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VT Green Tax Shift & Common Asset Fund Dec. 7, 2004 UVM Green Tax course Public Administration 395: Melissa Bailey Thomas A. Benoit Sr. Amanda Dow Davis John Demeter Cheryl L. Diersch Gary Flomenhoft, Instructor Peter M. Freeman Andrew Jope John Mejia Rachel Marie Weston. - PowerPoint PPT PresentationTRANSCRIPT
VT Green Tax Shift & Common Asset Fund
Dec. 7, 2004
UVM Green Tax coursePublic Administration 395:
Melissa BaileyThomas A. Benoit Sr.Amanda Dow DavisJohn DemeterCheryl L. DierschGary Flomenhoft, InstructorPeter M. Freeman Andrew JopeJohn MejiaRachel Marie Weston http://www.uvm.edu/~gflomenh/GRN-TAX-VT-PA395/
“There is nothing more difficult to carry out, more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For those who would institute change have enemies in all those who profit by the old order, and they have only lukewarm defenders in all those who would profit by the new order.”
---Nicolo Machiavelli, 1490
WHAT ARE GREEN TAXES?
"PAY FOR WHAT YOU TAKE, NOT FOR WHAT YOU MAKE"
"TAX WASTE, NOT WORK”
Tax Nature, NOT Labor or Capital
•Environmental protection•Economic Efficiency•Using market incentives
Survey-EU Green taxes
EU Types of Green taxes
NW GREEN TAX SHIFT
Inventory of NE GREEN TAXES
Source:Janet Milne,
Env. Tax Policy Inst., Vt. Law School
NE GREEN TAXES
Source:Janet Milne,
Env. Tax Policy Inst., Vt. Law School
NE GREEN TAXES
VT Taxes-2004
buildings-NICU
Other fees
Tobacco ProductsOther general taxes
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL CHEMICALSSpeculative Gains Tax
current use property
land-NICU
CigaretteBeverageCaptive Insurance
Sales & Use
Telecommunications
Telephone Company
Bank Franchise
Insurance
TOTAL ENERGY
Estate Tax
Personal Income
Property Transfer Tax
Meals & Rooms
Corporate Income
Telephone Property
CURRENT VERMONT GREEN TAXES
GREEN TAX PRINCIPLES
What is the goal of government?
What is the goal of taxation?
Can they be combined?
Rival}
Non-rival}
Excludable Non-Excludable
Market Good: Food, clothes, cars, land, timber, fish once captured, farmed fish, regulated pollution
Potential market good(Tragedy of the “non-commons”)but inefficient: patented information,Pond, roads (congestible),streetlights
Pure Public Good:climate stability, ozone layer, clean air/water/land, Biodiversity, information, habitat, life support functions, etc.
Open Access Regime: (misnamed: Tragedy of the commons)Oceanic fisheries, timberetc. from unprotected forests, air pollution, waste absorption capacity
Non-rival,congestible
Private beaches, private gardens, toll roads, zoos, movies
Public beaches, gardens, roads, etc.
Taxation + Provision of Public Goods
Taxation Public Goods
Green Taxes
GREEN TAX PRINCIPLES
1.Internalize external costs
2.Behavioral Approach
3.Revenue Generating
EXTERNAL COSTS?
ECONOMY
LAND USE
DEPLETION POLLUTION
(Not to mention social costs)
PRICES LIE
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1950 1960 1970 1980 1990 2000
Year
$/capita
Burlington
Chittenden
Vermont
US
Vermont GPI study
GDP AND HAPPINESS
1. Cost Internalization
•Pigouvian theory (AC Pigou)
•external costs
•Polluter pays principle
•restoration costs
•Least cost abatement-
•cost required to abate pollution
2. Behavioral Approach
WHATEVER YOU TAX YOU GET LESS OF
(WITH ONE EXCEPTION)
WHAT DO WE WANT LESS OF?
WHAT DO WE WANT MORE OF?
TAX ON BUILDINGS - production cost
S1
D
P
Q
p1
q1
CS
PS
S1
D
P
Q
p1
q1
CS
PS
tax
S2
p2
q2
tax
Deadweightloss
TAX ON BUILDINGS - production cost
Inelastic demand-gasoline (few subs.)
S1
D
P
Q
p1
q1
CS
PS
Inelastic demand-gasoline
S1
D
P
Q
p1
q1
CS
PS
S1
tax
S2
tax
q2
p2
Elastic demand-movie (many subs.)
S1
D
P
Q
p1
q1
CS
PS
S1
Elastic demand-movie
S1
D
P
Q
p1
q1
CS
PS
S1
tax
S2
p2
q2
TAX ON LAND - no production cost
D
P
Q
S
P1
Q1
“Buy land, they ain’t making any more.”
-Will Rogers
TAX ON LAND - no production cost
D
P
Q
S
P1
tax?
Q1
“Buy land, they ain’t making any more.”
-Will Rogers
P*
TAX ON LAND - no production cost
D
P
Q
S
P1
tax?
Q1
“Buy land, they ain’t making any more.”
-Will Rogers
P*
Q*
taxPs
Modern Economists
Right: “Land tax is the least bad tax” ---Milton Friedman
Green: “Taxation of value added by labor and capital is certainly legitimate. But it is both more legitimate and less necessary after we have, as much as possible, captured natural resource rents for public revenue.” ---Herman Daly
Left: “Usurious rent is the cause of worldwide poverty” ---Joseph Stiglitz
Green tax increase How to spend the money?
Dedicated revenues: ~$5 Million
Deficit reduction: none in VT
Other tax relief: ~$500 Million
3. Revenue Generating
GREEN TAX CRITERIA
1. ECONOMIC EFFICIENCY
2. DISTRIBUTIVE EQUITY
3. ENVIRONMENTAL PROTECTION
4. EASE OF ADMINISTRATION