Blogroll Five: Tax Foundation Policy Blog

Adding the Tax Foundation Policy Blog to the blogroll.

TFPB has been writing about Pigouvian taxes -- negatively, but intelligently, at least relative to the NoPigouClub fools.

Kitchen Linker will respond to some of these, but in the interest of "linking across the aisle" and access to data ...

The last blogroll addition was Tim Bray's ongoing.

Merry Dies Natalis Solis Invicti!

Sol Invictus (Wikipedia):

A festival of the birth of the Unconquered Sun (or Dies Natalis Solis Invicti) was celebrated when the duration of daylight first begins to increase after the winter solstice, — the "rebirth" of the sun.

The Sol Invictus festival ran from December 22 through December 25. Eradicating the remnants of this much-celebrated pagan holiday is likely the reason why Christmas was picked by the early Catholic leaders as the birthday of Jesus Christ.

Kitchen Linker wishes you and yours a happy one.

Sanguine about Pigou

Don Boudreaux of Cafe Hayek:

For this reason, among others, I cannot join my colleague Tyler Cowen in joining Greg Mankiw's Pigou Club. Even if global warming is a reality, another reality -- one with a much more consistent track record throughout history and across different countries -- is the perversity of political incentives. Given these perverse political incentives (not to mention the inevitiable scrawniness of government's access to information and knowledge), I don't trust government to impose and administer a Pigouvian tax with sufficient disinterestness and skill to make such a tax a plausible policy option.

So Don, Kitchen Linker has a question for you: Do you really prefer taxes on income and capital to a Pigouvian energy tax? Please read Pigou means less planning.

At least Don doesn't stoop to linking to the fools at the NoPigou Club.

Efficiently attacking inequality

Since discovering the Pigou Club, Kitchen Linker has gotten a little interested in tax policy. Here's a great article on this that has nothing to do with Pigou or energy. Sebastian Mallaby on Attacking Inequality in the Washington Post:

Fixing these egregiously regressive programs could yield really juicy benefits. On a back-of-the-envelope calculation, raising the minimum wage might transfer $10 billion a year to poor workers; call it $20 billion if you want to stretch the assumptions generously. But if you eliminated just a quarter of the subsidies in the tax code, you would liberate about $180 billion a year -- enough to finance a big expansion in the earned-income tax credit plus a cut in the regressive payroll tax. And this sort of redistribution would not risk higher unemployment or compromise economic growth at all. Democrats on the left and right ought to be embracing it.

The Milk Mafia

Unlike the SugarCorn Mafia, the Milk Mafia doesn't directly impact energy policy, but read the stunning and disgusting expose in the Washington Post and take our your anger on the SugarCorn Mafia.

p.s. Kitchen Linker says "milk is bad for your bones and immune system, say away from the cows, don't get hit by the milk mafia!"

A pro-Pigouvian anarchist!

It seems even anarchists accept that Pigouvian taxes are superior. Or at least hard-core libertarians can accept this, as Kitchen Linker is not certain that Degrees of Freedom is an anarchist, though the probability is high given DoF linkage. After a list of moralistic reasons taxes in general are bad, DoF says:

If a tax on gasoline could be implemented as a dollar-for-dollar replacement for the tax on capital gains, even I would be in favor of that.

DoF doesn't think a tax shift is possible because politicians like to spend, but then no tax reduction would be possible ever, and obviously taxes have been cut at various times. The important thing though is that a NoPigou type has admitted that Pigouvian taxes are superior!

Should other anarchists reconsider? And if anarchists, the only group that can logically oppose Pigouvian taxes, then everyone else should join the Pigou Club, pronto!

An anarchist comments!

Someone who claims to be an anarchist has commented on a post in which Kitchen Linker said:

Unless all NoPigouClub members are anarchists, they will admit that taxes need to be collected. The level of energy tax should not be set by the EPA or Commerce Department, but by Congress ... just as Income and other taxes are now set, mostly according to what Congress thinks it can get away with and how much is needed to cover spending minus borrowing. There is no additional planning, just a shift from one sort of taxes to another.

And the shift is better if you care about the environment, the economy, or simply distrust planners.

Why?

1. Taxes on income and capital suppress positive externalities (ex: economic growth).
2. Pigouvian taxes substitute for regulation and prohibition of greenhouse gas and other pollutant emissions.
3. (Redundant, but Kitchen Linker must drive home the point) Without pigouvian taxes, we will continue to have damaging tax on labor and capital AND extremely inefficient and politically determined non-solutions to our environmental problems (ex: the SugarCorn mafia)

Come to grips with reality NoPigou and switch clubs!

So Francis St Pierre is an anarchist. Other NoPigouers, come out or come to grips!

All taxes not created equally

Greg Mankiw finally comes out swinging against NoPigou types, making points Kitchen Linker has been trying to make:

The Pigou Club wants to move beyond the rhetorical syllogism, all too common in Republican circles, that

1. Taxes are bad.
2. Pigovian taxes are taxes.
3. Pigovian taxes are bad.

Such a simplistic mindset makes it impossible for people to discuss in a responsible way the relative merits of different tax systems. Instead, we Pigovians acknowledge:

1. There will be some government spending.
2. This spending will be funded with taxes.
3. Government should use the least bad taxes it has available.

and this:

Pigovians have no magic bullet to keep down government spending. Like many others, I believe that government spending is too high. But Pigovians need not be united about this. The key thing that unites us is the belief that whatever government spending is done, the tax revenue to pay for that spending should be raised in a way that does the least harm or, better yet, the most good.

Greg Mankiw also points out that economist and writer Tim Harford has succinctly joined the Pigou Club:

Consider the problem of climate change: a centralised regulatory approach here would be a catastrophe, lashing out at easy political targets such as SUVs or cheap airline travel. But pure laissez-faire will not save the planet either. A predictable tax on carbon would unleash a lot of world-saving creativity at minimum cost.

Jon's radio moves to Microsoft

The very first Kitchen Link blogroll additon has joined Microsoft, to evangelize for all that is good, as Jon Udell has always done:

Over the years I've evangelized a bunch of things to the alpha-geek crowd: Internet groupware, blogging, syndication, tagging, web architecture, lightweight integration, microformats, structured search, screencasting, dynamic languages, geographic mapping, random-access audio, and more. There's a purpose behind all this, and Doug Engelbart saw it very clearly a long time ago. The augmentation of human capability in these sorts of ways isn't just some kind of geek chic. It's nothing less than a survival issue for our species. We face some really serious challenges. The only way we're going to be able to tackle them is to figure out how to work together in shared information spaces. I've chosen to align myself with Microsoft because I think it has the scale, the resources, and the business incentive to help me empower a lot of people to learn how to do that.

Congratulations!

Fourth blogroll addition: ongoing

Yes, ongoing additions to the Kitchen Link blogroll, and this one by Tim Bray is called ongoing. Tim Bray writes eloquently about IT and Canada (no kidding) and has a wonderful sense of design. Apparently he is one of the inventors of XML. That sounds painful, but he can visit the Kitchen any time so long as he keeps his sharp angle brackets at home.

The last Kitchen Link was inspired by Tim Bray.

The last blogroll addition was Tom Evslin's Fractals of Change.

Taxing Avatars

Tim Bray writes about calculations that say an avatar in an online world consumes as much electricity as an average Brazilian. Kitchen Linker thinks this is a little exaggerated, as a human uses many other forms of energy. But those who run server farms could use some additional incentive to become more efficient. Yes, that's right, time to trot out the Pigouvian energy tax yet again. That might not be bad for Sun, Tim's employer, which apparently sells efficient servers and has an enviroguru.

Besides, aren't politicos looking for a way to tax virtual worlds anyway? An energy tax is a way to do it non-intrusively.

But long term virtual worlds are all good for the environment. They can allow us to cut back on car and plane trips. As Kitchen Linked before, IT is an efficiency-enabler.

Third blogroll addition: Fractalize Everything!

Actually, Tom "nothing great has ever been accomplished without irrational exuberance" Evslin's blog is called Fractals of Change, but the title of this post is a probably stretched reference to his recent post Distribute ALL Networks. Decentralization, and not just of computer networks, is one of Tom's themes that Kitchen Linker finds compelling, and required reading. Here's an excerpt:

However, the same technology which allows us to run a decentralized communication network like the Internet and which can allow us to move to a mesh architecture for Internet access, also can help with decentralizing our energy supply. To be continued shortly in another post.

Previously blogged about a decentralized Internet as America’s Antiterrorism Network (here and here).

The Kitchen's second blogroll addition was Greg Mankiw, who has been Linked more times than KL can count by now.

Unfair hearing for Pigou Club

Greg Mankiw says Bloomberg's Amity Shales gives the Pigou Club a "fair hearing." Kitchen Linker isn't going to judge "fair" but the columnist gets everything wrong in Gas Tax Fans Invoke a Telling Name for Road Hogs. Her three anti-Pigouvian arguments:

Well not all. For there is already a No Pigou Club, founded by Terence Corcoran, editor of Canada's National Post. Corcoran offers some compelling counterarguments. Pigovian taxes change behavior, he notes, but not necessarily as their sponsors wish. Gas taxes may depress driving, but perhaps not enough to matter. Late in life Pigou himself acknowledged this, writing that when it came to such taxes ``we seldom know enough to decide'' which is the right tax or the right tax rate.

The second argument against a gas tax is that today, when even GE calls itself green, it's a hard sell. Democrats in Washington believe they won in November by playing against the stereotype of their party. So they are unlikely to push for a levy associated with Al Gore.

But the strongest argument against a gas tax is that revenues from such taxes tend to be used for purposes other than those intended. The states' cigarette taxes, for example, are classically Pigovian, punishing an unwanted behavior. But the billions those taxes have earned have promoted another kind of sin: excessive government spending. Too often the money has gone into state general revenue coffers instead of paying for smoking prevention and medical care for smokers.

The second is not an argument against Pigouvian taxes per se. It just says they will be politically difficult to enact. So what? Is any change from the status quo politically easy? As noted previously, any tax change is hard, so why not go for a big and much better one?

The first and third arguments only make sense if Shales is an anarchist. Does anyone ever argue against taxes on labor or capital because it is hard to figure out their "optimal" level? The fact is the primary purpose of taxation is to raise revenue for government, nevermind their "optimal level" for any other purpose. Quite simply Pigouvian taxes discourage harmful behavior, most taxes (for example on labor or capital) discourage productive behavior. Any questions?

Any anti-Pigouvian non-anarchist ignoring these facts needs to address them or completely miss the point, verging on dishonesty.

WikiElders

Are you an advocate of elder rights on the Internet?

Have you ever used or edited a wiki, such as the world-famous Wikipedia?

Then we want you to join the Wiki Elders Movement.

http://wikielders.org

Wikis like Wikipedia allow elders everywhere to share knowledge, ideas and experiences. But wherever elders use the Internet, they are faced with ignorant and condescending views. Crass and unwise "youth culture" pervades online content and communities. The Wiki Elders Association seeks to give elder readers, users and editors a voice.

Beyond demanding equal treatment as wiki contributors, our goal is to build a shared understanding of wiki ethics. Vandalism and immature behavior are condemned on most wikis, and sensible learning approaches for new wiki users are encouraged. We want to have fun, but not at the expense of others. We want to help you to understand the maze of wiki-rules, so that you too can have fun.

We would also like to give intelligent elders a shared social space where they can talk about their experiences in not only wiki communities, but also their daily lives. eventually, we hope that we can develop the WEA into a true social movement which organizes events and campaigns. But our initial goals are modest: we only want to become the single largest world-wide community of elder wiki users.

The WEA is not a formal organization. There is no membership other than registration for our wiki and forums.

Join today!

Someone should start WikiElders. Kitchen Linker has nothing against WikiYouth, who are probably wise indeed relative to other youth. May all you become WikiYouth, all elders WikiElders, all people WikiPeople, all robots WikiRobots ... ok, let's not get carried away.

What is the age distribution of Wikipedians?

Win-win taxes

Pigou Club founder Greg Mankiw quotes Brink Lindsey on win-win taxes:

Tax reform also offers the possibility of win-win bargains. The basic idea is simple: Shift taxes away from things we want more of and onto things we want less of. Specifically, cut taxes on savings and investment, cut payroll taxes on labor, and make up the shortfall with increased taxation of consumption. Go ahead, tax the rich, but don't do it when they're being productive. Tax them instead when they're splurging--by capping the deductibility of home-mortgage interest and tax incentives for purchasing health insurance. And tax everybody's energy consumption. All taxes impose costs on the economy, but at least energy taxes carry the silver lining of encouraging conservation--plus, because such taxes exert downward pressure on world oil prices, foreign oil monopolies would wind up getting stuck with part of the bill.

Blogging and scooping

Kitchen Linker didn't intend for this blog to be dominated by green tax policy. The expectation was to write about technology, cool stuff, blogging, and the occasional rant.

So back to about blogging for just one post. I decided to add a link to Scoopt, which facilitates licensing of blog content to mainstream media.

That means if you don't want to play by the Kitchen Rules you can pay to still use the Kitchen.

Gas prices change habits

Kitchen Linker says, duh. San Francisco Chronicle, SALES SLOW FOR HYBRIDS: Gas prices fall, so does federal tax credit. Just evidence that increased gas prices change long term behavior, which is what is needed for a long term solution to global warming. A pigouvian tax of course can push this change along nicely, and replace destructive taxes on labor and capital.

Pigou Club on Wikipedia

Did you know the Pigou Club has an article on Wikipedia?

Kitchen Linker did link it last post.

Another reason a gas tax is ideal

San Francisco Chronicle, Gas prices hardly effect demand.

Record high gasoline prices haven't made a serious dent in America's demand for fuel, a new UC Davis study suggests.

But:

Severin Borenstein, director of the University of California Energy Institute, noted that the UC Davis study measures short-term changes in gasoline use based on short-term price increases.

Long-term changes in driving and buying habits are harder to track but matter far more, Borenstein said. And taxes, which stick around year after year, can prompt drivers to make long-term changes, such as buying more efficient cars or living closer to work.

"That's what actually changes auto fleets, housing decisions, political support for mass transit," said Borenstein, whose institute organized today's research conference. "They're right that this is a little piece of that puzzle, but the jump they make on gas taxes is a stretch."

This however is totally untrue:

Research showing that use doesn't decline much as prices rise undercuts arguments for higher gas taxes.

Rather, it means there is huge latitude for higher gas taxes. And Kitchen Linker says shoot for the moon, cause enacting a high tax that can replace, say the payroll or other harmful tax as Al Gore and others have proposed, is no harder than enacting a small increase. Also from the Chronicle article:

"I would advocate for a tax, but I'm also a realist, and I know it would never work," said Christopher Knittel, a Davis economist and one of the report's co-authors. "It's hard to get a 10-cent gasoline tax passed, much less one over a dollar."

Knittel is wrong to be pessimistic. Join the Pigou Club and make it happen!

Rational energy tax, what would it look like?

Good longish article:

Our national energy tax policy is misguided in at least three ways. First, a policy to promote energy independence through reduced oil imports is based on a fundamental misunderstanding of how energy markets function. A policy that attempts to establish energy independence by promoting domestic fossil fuel production is especially misguided. Second, our policy relies heavily on energy subsidies, most of which are socially wasteful, inefficient, and driven by political rather than energy considerations. Third, current energy taxes are deficient on a number of levels.

The article is from the AEI, a conservative think tank. They use different language, but the policy ends up matching Al Gore's proposal. Also from the AEI article:

Second, we should implement a green tax swap. A green tax swap uses revenue from environmentally motivated taxes to lower other taxes in a revenue-neutral reform. For example, Congress could reduce reliance on oil and other polluting sources of energy by implementing a carbon tax. The revenue could be used to finance corporate tax reform or reductions in the payroll tax. [12] Consider a tax of $15 per metric ton of carbon dioxide--a tax rate comparable to the current carbon price in the European Emissions Trading System. Focusing only on carbon [13] and assuming a short-term reduction in carbon emissions of 10 percent in response to the tax, a $15-per-ton tax rate would collect nearly $80 billion a year, an amount that represents 28 percent of all corporate taxes collected in the United States in 2005. Assuming the carbon tax was fully passed forward into consumer prices, it would raise the price of gasoline by 13 cents a gallon, the cost of electricity generated by natural gas by 0.6 cents per kWh, and the cost of electricity generated by coal by 1.4 cents per kWh.

Or Congress could raise the gasoline tax, index it for inflation, and return the additional revenue through a tax reduction. A gasoline tax increase is less efficient than a carbon tax at reducing carbon emissions. [14] Accepting the references cited above at face value, however, the gasoline tax increase would move us in the direction of the optimal Pigouvian tax on motor fuels, taking into account other pollution externalities as well as congestion and accident externalities. [15]

Next we should eliminate the gas guzzler tax loophole for SUVs and light trucks. Congress might also consider augmenting the gas guzzler tax by shifting to a feebate approach whereby low-mileage vehicles are taxed at increasing rates, as under the current gas guzzler tax, and fuel-efficient vehicles receive a tax subsidy. That could be structured to be revenue neutral.

Bravo!