OPEC tax shift

Greg Mankiw provides some hard budget info:

For example, if I am reading it correctly, we could increase the gasoline tax by $1 (see revenue option 48) and reduce all ordinary income tax rates, AMT rates, and dividend and capital gains rates by 2 percentage points (see revenue option 1) to produce an approximately revenue-neutral tax reform.

That's a start.

But Kitchen Linker really likes a comment by "Mr. Mercy Vetsel" on Mankiw's post:

Amen! Now we just need to package that with a clever name that doesn't inspire thoughts of pork...

Preparing to join the "OPEC Tax Shift (Shift Taxes to OPEC)" club

Amen!

Toyota #1: fear and marketing or pricing and environment?

BusinessWeek on Why Toyota Is Afraid Of Being Number One -- anti-foreign backlash. So Toyota is afraid, and running ad campaigns to emphasize its U.S. employment base.

Kitchen Linker's observations:

• Toyota doesn't have to take the #1 spot no matter how bad the Big Three get. Toyota can raise prices instead.


• Toyota should emphasize (and invest in) green cars. Nothing could be more patriotic, or good for the U.S. economy. Fear and marketing is no substitute for doing good.

Ruby 2.0/Yarv for green software?

Ruby 2.0 will be very fast, which is a good thing for the planet.

Return of the Gao tree

Must read article in the NYT on return of trees to Niger during a period of population explosion.

Enlightened policies leading to such results are badly needed for the poorest to cope with (now inevitable) global warming:

Still, more trees mean that Niger’s people are in a better position to withstand whatever changes the climate might bring. “This is something the farmers control, and something they do for themselves,” said Dr. Larwanou. “It demonstrates that with a little effort and foresight, you can reduce poverty in the Sahel. It is not impossible or hopeless, and does not have to cost a lot of money. It can be done.”

A combination of efficient policies to make sure global warming doesn't get increasingly worse from industrialized countries (i.e., green tax shift) and low cost but highly effective green policies like those that led to the re-greening of Niger, and we can get through this.

Continental Europe: Getting out of the way?

Greg Mankiw links to an interesting column that has nothing to do with Pigouvian taxes ... Ed Phelps on Why European economies lag behind the U.S.:

The values that might impact dynamism are of special interest here. Relatively few in the Big Three report that they want jobs offering opportunities for achievement (42% in France and 54% in Italy, versus an average of 73% in Canada and the U.S.); chances for initiative in the job (38% in France and 47% in Italy, as against an average of 53% in Canada and the U.S.), and even interesting work (59% in France and Italy, versus an average of 71.5% in Canada and the U.K). Relatively few are keen on taking responsibility, or freedom (57% in Germany and 58% in France as against 61% in the U.S. and 65% in Canada), and relatively few are happy about taking orders (Italy 1.03, of a possible 3.0, and Germany 1.13, as against 1.34 in Canada and 1.47 in the U.S.).

So EUians don't want to lead or follow. As a result their relatively shrinking economies are getting out of the way.

Now if the US would just take a dynamic lead on efficient environmental policies...

Congestion pricing goes well with other eco-efficient policies

Kitchen Linker is a big fan of congestion pricing. While not as important as (much) higher gas taxes replacing less efficient taxes, congestion pricing is another win-win: more efficient and more environmentally friendly transportation system.

Save the environment and the economy, yada yadda yaddda.

Branson's billions putting brains to work for the earth

Richard Branson's investments in biofuels were welcome but not exciting, as biofuels are marginal at best (and environmental suicide via politics at worst).

With the Virgin Earth Challenge (and some instruction from Al Gore?), Branson's money is working smarter. Very very cool.

The Virgin Earth Challenge is a prize of $25m for whoever can demonstrate to the judges' satisfaction a commercially viable design which results in the removal of anthropogenic, atmospheric greenhouse gases so as to contribute materially to the stability of Earth’s climate.

High risk of housing BUST

Kitchen Linker doesn't like writing about the housing bubble, but sometimes the facts are too much. Take this paragraph from the San Jose Mercury News story on a National Association of Realtors survey:

The highest loan-to-value ratios for first-time buyers were in the South, where the median mortgage was 100 percent of the sale price. In the West, the median was 99 percent, in the Midwest 98 percent, and in the East, 96 percent.

By comparison, the typical repeat home buyer nationwide invested a median 16 percent as a down payment to purchase a replacement home -- typically from the proceeds of a prior sale -- and financed the remaining 84 percent.

Kitchen-mates, a price decline over the next year or two is going to put millions of home "owners" under water. Any increase in unemployment is going to send millions to the hills, or rather cheap apartments and parent's homes (think abut that recursively). Result: housing BUST.

Truth too inconvenient

The Washington Post has some excellent columnists. Robert Samuelson says:

What we really need is a more urgent program of research and development, focusing on nuclear power, electric batteries, alternative fuels and the capture of carbon dioxide. Naturally, there's no guarantee that socially acceptable and cost-competitive technologies will result. But without them, global warming is more or less on automatic pilot. Only new technologies would enable countries -- rich and poor -- to reconcile the immediate imperative of economic growth with the potential hazards of climate change.

Meanwhile, we could temper our energy appetite. I've argued before for a high oil tax to prod Americans to buy more fuel-efficient vehicles. The main aim would be to limit insecure oil imports, but it would also check CO2 emissions. Similarly, we might be better off shifting some of the tax burden from wages and profits to a broader tax on energy or carbon. That would favor more fuel-efficient light bulbs, appliances and industrial processes.

It's a debate we ought to have -- but probably won't. Any realistic response would be costly, uncertain and no doubt unpopular. That's one truth too inconvenient for almost anyone to admit.

Kitchen Linker is 100% for a realistic response.

Global Warming's Simple Remedy

Anne Applebaum in the Washington Post:

Any lasting solutions will have to be extremely simple, and -- because of the cost implicit in reducing the use and emissions of fossil fuels -- will also have to benefit those countries that impose them in other ways. Fortunately, there is such a solution, one that is grippingly unoriginal, requires no special knowledge of economics and is easy for any country to implement. It's called a carbon tax, and it should be applied across the board to every industry that uses fossil fuels, every home or building with a heating system, every motorist, and every public transportation system. Immediately, it would produce a wealth of innovations to save fuel, as well as new incentives to conserve. More to the point, it would produce a big chunk of money that could be used for other things. Anyone for balancing the budget? Fixing Social Security for future generations? As a foreign policy side benefit, users of the tax would suddenly find themselves less dependent on Persian Gulf oil or Russian natural gas, too.

Most of all, though, the successful use of carbon taxes does not require "American leadership," or a U.N. committee, or a complicated international effort of any kind. It can be done country by country: If the British environment minister or the German chancellor wants to go ahead with it tomorrow, nothing is preventing them. If a future American president wants to rally the nation around a patriotic and noble cause, then he or she has the perfect opportunity. If the Chinese see that such a tax has produced unexpected benefits in America and Europe, they'll follow. And when that happens, we'll know that the apocalyptic climate change rhetoric has finally been taken seriously.

Bono the tax hypocrite

See the New York Times story on U2's use of tax shelters.

This story isn't about Pigouvian taxes, but Kitchen Linker will take the opportunity to advocate 'em. If taxation were shifted from activities with positive externalities to activities with negative externalities then U2's licensing income would not be taxed and hypocritical tax dodges would not be "required" by U2-the-business, nor would they be possible.

On the other hand, U2 and U2 fan's jet-setting ways (KL includes the fans, as let's face it, only rich fans can afford to attend top stars' concerts, and fans often travel to do so) would be heavily taxed.