blue ribbon tax commission dec. 8, 2009 revenue for a sustainable economy: green taxes, common...
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BLUE RIBBON TAX COMMISSIONDec. 8, 2009
Revenue for a Sustainable Economy:Green Taxes, Common Assets, and Subsidy Reform
Gary Flomenhoft,Research Associate/Lecturer inPublic Administration,Community Development andApplied EconomicsGund Institute Fellow
Green TaxesMelissa BaileyThomas A. Benoit Sr.Amanda Dow DavisJohn DemeterCheryl L. DierschPeter M. Freeman Andrew JopeJohn MejiaRachel Marie Weston
Acknowledgements
Common AssetsRoss SaxtonMark KolonowskiBeth NolanColin McClungConor CaseyIan RaphaelWill MurrayElliot Wilkinson-RaySusan Skalka
Invitation: Rep. Dave Sharpe & Commission
Student Researchers
WHO AM I AND WHAT AXE AM I GRINDING?
•BS Mech Eng, Tufts•Master Public Policy & Eco-Economics UMD•Came to UVM in 2002 with Gund•Teach RE, Macro, Intl Development•Research in Public Finance for Sustainability•Worked in all sectors: private, government, and non-profit:
•Taught HS, resorts, aerospace engineer, environmental groups, HUD, started three businesses.
•Love Vermont and see it as a laboratory of democracy where good ideas can be implemented through open government
•Political independent, everyone has part of the truth•Policy wonk
TAXES=THIRD RAIL OF POLITICS
WHOSE OX WILL YOU GORE? OR WILL IT GORE YOU?
GREEN ECONOMY?
PRICES
VT GREEN ECONOMY
Always cheaper to do the wrong thing.
SUMMARY-make prices tell the truth
GREEN TAX SHIFT:“TAX BADS, NOT GOODS”
COMMON ASSETS:"PAY FOR WHAT YOU TAKE, NOT FOR WHAT YOU MAKE"
SUBSIDY REFORM:“STOP SENDING GOOD MONEY AFTER BADS”
ECONOMY = THROUGHPUT
ECONOMY
LAND USE
DEPLETION POLLUTION
Purpose: Max GDP = max throughput = DUMB GROWTH!
(Value added)
(By K & L)
ECONOMY = THROUGHPUT
ECONOMY
LAND USE
DEPLETION POLLUTION
Purpose: max value added/ minimum throughput=SMART GROWTH!
(Value added)
(By K & L)
GREEN TAX SHIFT
WHATEVER YOU TAX YOU GET LESS OF, THEREFORE:
TAX DEPLETION, LAND USE, AND POLLUTION MORE
TAX VALUE ADDED (LABOR, CAPITAL INVESTMENT,BUILDINGS, ENTREPRENEURSHIP, ETC LESS
REVENUE NEUTRAL
Survey-EU Green taxes
1999 VERMONT TAXES
VT Taxes 1999
TOTAL ENERGY
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL PROPERTY
Personal Income
Estate Tax
Sales & Use
Meals & Rooms
Telephone PropertyTelecommunicationsCorporate Income
Bank Franchise
InsuranceBeverage
CigaretteTelephone Company
Captive Insurance
2000 VERMONT TAXES
VT taxes 2000
TOTAL ENERGY
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL PROPERTY
Personal Income
Estate Tax
Sales & Use
Meals & Rooms
Corporate IncomeTelecommunications
Telephone Property
InsuranceCaptive Insurance
Beverage
CigaretteTelephone Company
Bank Franchise
2001 VERMONT TAXES
VT TAXES 2001
TOTAL ENERGY
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL PROPERTY
Personal Income
Estate Tax
Sales & Use
Meals & Rooms
Telecommunications
Telephone Property
Corporate Income
InsuranceCaptive Insurance
Beverage
Telephone Company
Bank Franchise
Cigarette
2002 VERMONT TAXES
VT TAXES 2002
TOTAL ENERGY
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL PROPERTY
Personal Income
Estate Tax
Sales & Use
Telecommunications
Meals & Rooms
Insurance
Telephone Company
Corporate Income
Beverage
CigaretteTelephone Property
Bank FranchiseCaptive Insurance
2003 VERMONT TAXES
VT TAXES-2003
TOTAL ENERGY
TOTAL AIR AND WATER
TOTAL WASTE
Personal Income
Estate Tax
Sales & Use
Meals & Rooms
Telecommunications
Telephone Property
InsuranceTelephone Company
Bank Franchise
Captive Insurance
TOTAL PROPERTY
BeverageCigarette
Tobacco Products
Corporate Income
2004 VERMONT TAXES
VT taxes-2004
TOTAL PROPERTY38%
Personal Income21%
Estate Tax1%
TOTAL ENERGY13%
TOTAL AIR AND WATER0%
TOTAL WASTE
Cigarette2%
Bank Franchise0%Telephone Company
0%
Telecommunications1%
Meals & Rooms5%
Sales & Use12%
TOTAL CHEMICALS
Beverage0%
Telephone Property0%
Corporate Income3%
Insurance1%
Captive Insurance1%
2008 VERMONT TAXESVT Taxes-2008
Sales & Use14%
Personal Income
Cigarette fee
slicquor
1%
Estate Tax1%
TOTAL PROPERTY34%
TOTAL ENERGY11%
Meals & Rooms5%
Captive Insurance
Insurance1%
Corporate Income3%
lottery
2004 VERMONT TAXES
VT taxes-2004
TOTAL PROPERTY38%
Personal Income21%
Estate Tax1%
TOTAL ENERGY13%
TOTAL AIR AND WATER0%
TOTAL WASTE
Cigarette2%
Bank Franchise0%Telephone Company
0%
Telecommunications1%
Meals & Rooms5%
Sales & Use12%
TOTAL CHEMICALS
Beverage0%
Telephone Property0%
Corporate Income3%
Insurance1%
Captive Insurance1%
2004 VERMONT TAXES: LAND&BLDGS
VT Taxes-2004
buildings-NICU24%
Other fees3%
Other general taxes1%
TOTAL AIR AND WATER0%
TOTAL WASTE
TOTAL CHEMICALS
Speculative Gains Tax0%
current use property0%land-NICU
11%
Cigarette2%
Captive Insurance1%
Sales & Use12%
Telecommunications1%
Insurance1%
TOTAL ENERGY12%
Estate Tax1%
Personal Income20%
Property Transfer Tax2%
Meals & Rooms5%
Corporate Income3%
2004 VERMONT 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
GREEN TAX CRITERIA
1. ECONOMIC EFFICIENCY2. DISTRIBUTIVE EQUITY3. ENVIRONMENTAL PROTECTION4. EASE OF ADMINISTRATION
Tax Commission Mandate1. Sustainability2. Appropriateness3. EquityMinimize regressivity-minimize tax on LIFair, efficient, effective administration
GREEN TAX NEW REVENUE
Additional revenue from Green Taxes – where should it go?
• Offset Individual income tax?
• Offset Corporate/business income tax?
• Offset Telecommunications tax?
• Other Recommendations?
• Offset Fed payroll tax?
GREEN TAX SHIFT OPTION 1
VT Taxes-2004 REVISED
buildings-NICU
Other fees
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL CHEMICALS
Speculative Gains Tax
current use property
land-NICU
Other general taxesTobacco Products
Cigarette
Meals & Rooms
Telephone Company
Insurance
Captive Insurance
Beverage
TOTAL ENERGY
Sales & Use
Estate Tax
Property Transfer Tax
Telecommunications
Telephone Property
Bank Franchise
•Offset Individual income tax -$429.5M•Offset Corporate/business income tax -$55.5M•Offset Telecommunications tax -$15M
PAYROLL vs INCOME TAX
Income employee
VT income
tax
FICA employee
FICA employer
Self-employed
$10-$15K
0 $956 $956 $1912
$15-$20K
$79 $1340 $1340 2680
$25-$30K
$633 $2486 $2486 $4972
PAYROLL TAX MUCH MORE REGRESSIVE!
GREEN TAX SHIFT OPTION 2
VT Taxes+FPT 2004 REVISED
Other fees
buildings-NICU
Tobacco Products
Other general taxes
TOTAL AIR AND WATER
TOTAL WASTE
TOTAL CHEMICALS
Speculative Gains Tax
current use property
land-NICU
CigaretteBeverage
Captive Insurance
Sales & Use
Telecommunications
Telephone CompanyBank Franchise
Insurance
TOTAL ENERGY
Estate Tax
Personal Income
Property Transfer Tax
Meals & Rooms
Corporate Income
Telephone Property
-$500M Payroll tax <$35K income and pro-rate above
Or cash refund
Energy taxes in Germany increased by 55 percent, additional increase in 2005 through truck toll
FINANCIAL EFFECTS OF 1999 ETR IN GERMANY (IN BILLION EURO)
Energy taxes 2003/2005
Energy taxes
18,7 bn €=
55% in-crease
Electricity (0 → 2,1 cents/kWh)
1998
6,5
5,0
1,8
16,0
22,8~ 34
2005
Road toll for trucks
+ 3,0
Fuel oil (4,1 → 6,2 cents/l)
Diesel (31,7 → 47,2 cents/l)
Petrol (50,1 → 65,6 cents/l)
Natural gas (0,2 → 0,6 cents/kWh)
ETR
~ 53 3,0 Road Toll (0 → 9-14 cents/km)
~ 56
Total green taxes almost 90 Bn (incl. tobacco, land
etc.)
1999
+4,3
2000
+2,5
2001
+3,0
2002
+2,5
2003
+4,3
Almost 90 Percent was recycled to citizens in order to reduce labour cost
GERMAN ETR: RECYCLING OF THE RETURNS
89%
2%9%
Decrease in pension costs = 16 Bn relief for employers, employees and pensioners
Pension system
Environment Projects • Renewable
Energies• Less CO2 in
buildings• Tax break bio-fuels
Our Comment:
• Great idea, in principle
• Less than perfect execution
Economy
Govt.
Social Security
Budget use
First Results of Ecological Tax Reform
POSITIVE EFFECTS ON NATURE, INNOVATION AND LABOUR
Fuel consumption (-16%)CO2-emissions (2-2,5%)Pension costs (-16 bn)Costs for industry (-1 bn)Empty truck travelImported fossil fuels (-
13%)Overall tax burden (-4 %)
Tax share of NatureCar sharing (+70 %)Public transport (+5 %)Energy saving
technologiesEnergy efficiencyGas-powered cars (x10)Bio-fuelled cars (x2)Job creation (≈ 250.000)Renewable energies
Less
More
More jobs in RENs than in our heavily subsidized problem energies
25000
50.000
20000
10000
64.00044000 38000
6000
Renewable Energy coal nuclear power lignite Source: BEE 2005
WaterGeothermal powerSolar
Bioenergy
Windpower
REN: 150.000 jobs
JOBS IN THE ENERGY SECTOR IN GERMANY 2005
Problem energies: 107.000 jobs
100% Green shift-OPTION 3Carbon $300/ton
Land 9.6%
Waste $2/bag
Water 1c/gal
>100gals
Chem
product fee
$300 on pesticides
$2.6B revenue
2004-100% GREEN
TOTAL ENERGY36.0%
land 54.5%
TOTAL WASTE5.9%TOTAL CHEMICALS
0.1%
TOTAL AIR AND WATER3.5%
Why should we?
.25% Financial speculation tax
$269 Million
Land bubble
Credit default swaps
Mortgage backed securities currency
hedges options
derivativesExemptionsIPOs, new stockVenture CapitalAngel InvestorsSmall business loansEtc.
95% Speculation
(A NO BRAINER)