Bush's Pigouvian opportunity

It is no surprise that in order to pay for massive increases in federal spending (think Iraq and drug payments) Bush will raise taxes. If Bush is smart (stay with Kitchen Linker; even a broken clock is smart twice a day) he would use this "opportunity" to join the Pigou Club and increase the federal gas tax.

Dear GWB,

Extending the payroll tax will not contribute to your legacy. Taking the first step to efficiently save the planet from climate change will. You decide.

Sincerely,
Kitchen Linker

p.s. Top Democrats have good ideas on tax simplification that should be bipartisan. Work with them.

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.

Pelosi's pigouvian opportunity

SF Chronicle on how fixing the Alternative Minimum Tax, which hits Democratic voters hard, is putting the new Democratic Congress in a tough spot:

But if Democrats impose the pay-go rule, they cannot fix the alternative minimum tax without gutting existing spending programs -- much less creating new ones -- or sharply raising other taxes.

Sounds like a perfect opportunity to swap in a gas tax, which should doubly please environmentalist Democrats.