Save the Environment: Repeal the Mortgage Interest Deduction

That's the title of a great Tax Policy Blog post:

Powerful U.S. Rep. John Dingell revealed Tuesday new details of his plan to cut global warming, including adding a 50-cents-a-gallon tax on gasoline and ending the mortgage tax deduction on what he called "McMansions," homes larger than 3,000 square feet.

On the same blog, France rejected a mortgage interest deduction.

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...

Fix corporate tax competition with green taxes

Today's Financial Times has a subscriber-only article Europe's tax rivalry keeps multinationals on the move bemoaning tax competition and an eventual "race to the bottom" for corporate taxation.

Kitchen Linker says this is not a problem but a grand opportunity: replace corporate taxes (and taxes on increasingly mobile labor) with green taxes. Save the environment, economy, and state, all in one fell swoop!

Another FT article hints this is the way things are going:

French VAT is already at 19.6 per cent, and Germany had implemented some significant structural reforms that remained elusive in France. However the ministry was examining whether some of the tax burden on labour could be transferred, for example through environmental charges, he said.

France’s expression of interest in Berlin’s VAT experiment could be the first of many, according to economists.

“You can see that possibly even Britain is going that way with the debate on the environmental tax,” said Holger Schmieding, senior economist with Bank of America.

Excellent, now go faster, and also in America!