WASHINGTON (AP) — How about this for a way to cut your personal taxes: make businesses that pollute the environment and use precious natural resources pay government levies instead.
A Worldwatch Institute study issued over the weekend says such a plan could ease Americans’ conventional tax burden by 15 percent.
The trade-off, proposed in “Getting the Signals Right: Tax Reform to Protect the Environment and the Economy,” would raise taxes on emissions, pollution and use of energy and resources, and earmark all proceeds to reduce existing taxes that penalize work, investment and consumption.
“Ninety percent of the taxes we pay today … boil down to taxes on work and investment,” such as income, sales, payroll, profit, capital gains, trade and property assessments, said study author David Malin Roodman.
Including the gasoline tax, “less than 5 percent of taxes are from activity that hurts the environment,” he added at a news conference.
“Why should tax codes discourage investment and employment unnecessarily when large parts of government are trying to stimulate those activities?” Roodman asked. “Why shouldn’t tax codes discourage pollution?”
In 1993, President Clinton proposed a U.S. energy user tax. But because the Clinton plan was to be used to cut the budget deficit, “its benefits were much fuzzier,” Roodman said.
Policymakers in Denmark, Germany, the Netherlands and other European countries are leading the way in imposing “green taxes,” which can include emission levies or buying and selling so-called pollution quota permits, interchangeable among different enterprises.
For example, the study said Holland’s taxation of heavy metal emissions has reduced leakage of cadmium, copper, lead, mercury and zinc into canals and lakes by up to 97 percent since 1976.
The study argues economies are hurt by conventional taxes — especially on capital gains, wages and profits — because they discourage growth.
But “environmental tax and permit systems can raise trillions of dollars … allowing significant tax cuts for work and investment,” it said.