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It would also have a worse effect on the poorest.

gruez 5y ago
That's true of most consumption taxes, but this can be offset by giving a fixed tax credit to everyone. eg. if the median person is expected to pay $1000/yr in carbon taxes, then give them a yearly check for $1000 so it doesn't cost them extra. If they can reduce carbon on top of that, great! It's free money for them.
andruby 5y ago
Besides lowering income tax, what else could help offset this?
- fighterpilot 5y ago
  Lower sales tax.
- hedora 5y ago
  Universal basic income. (And, in the US, replacing the current income tax system with a flat tax. Due to loopholes, the US system is regressive after a certain income level. A flat tax isn’t)
  - garraeth 5y ago
    Tangentially, is is presumptions to see the wave of stimulus checks as the genesis of a UBI system, not named as such, but essentially what we will end up with? Since many times government programs are never rolled back. Imagine: every 6 months or so, $X gets sent out.
    - klmadfejno 5y ago
      Sounds incredibly unlikely to me. It's also neither universal, nor basic. Which is perhaps healthier in the long run.
  - klmadfejno 5y ago
    The us income tax may be regressive past certain income levels, but for the 99% of the population below those levels, it's a progressive system. A flat tax might be more progressive on average, weighted in dollars, but will undoubtedly be more regressive to the majority of poor people.
    - AnthonyMouse 5y ago
      > The us income tax may be regressive past certain income levels, but for the 99% of the population below those levels, it's a progressive system. "Regular people pay higher marginal rates than rich people, but other than that it's a progressive tax system" is basically the opposite of a progressive tax system. But on top of that, it isn't even true that the marginal rates paid in practice by lower income people are lower than those paid by middle income people, because of benefits phase outs. The system we currently have is worse than a flat tax across the board. The people at the bottom pay the highest marginal rates. The only sense in which it's progressive is the same one you get with a UBI and a flat tax, i.e. that the effective rates on the poor are lower because the taxes they pay are more than offset by the lump sum benefit(s).
      - klmadfejno 5y ago
        > "Regular people pay higher marginal rates than rich people, but other than that it's a progressive tax system" is basically the opposite of a progressive tax system. Not really what I said. If richer people progressively pay more tax for the bottom 99% of the population, that's arguably still a progressive system. The top 1% not paying more feels more like a problem in the implementation of what is otherwise a fairly progressive setup. I don't think I believe that poor people pay the highest marginal income tax rates given that some poor people pay none and all rich people have the amt. Other taxes, like sales tax, might make that true. A flat tax is more regressive than a progressive tax with loopholes cut out.
        AnthonyMouse 5y ago
        > Not really what I said. If richer people progressively pay more tax for the bottom 99% of the population, that's arguably still a progressive system. Except that that isn't what happens for the people at the very top, i.e. the investment class. The capital gains rate (paid by billionaires) is lower than the top earned income rate (paid by millionaires) and billionaires and international corporations use tax avoidance strategies to reduce the amount of income they pay tax on to begin with. A flat tax can't be avoided in the same ways. > I don't think I believe that poor people pay the highest marginal income tax rates given that some poor people pay none and all rich people have the amt. You're confusing marginal rates with effective rates. Suppose you make $15,000/year and get $5000/year in government assistance. But the assistance programs phase out at various rates that add together to 80%. If you make an extra dollar, you lose $.25 of food assistance, $.30 of housing assistance and $.25 of childcare assistance, something like that. Because those benefits phase out. The government takes 80% of the marginal dollar. Even if your "income tax bracket" is 0%, your marginal tax rate is 80%. This is more than some higher income person paying a marginal rate of 25% or 35%. Your effective tax rate is -33%, because you made $15,000 and then "paid" -$5000 to the government, i.e. received $5000 in assistance. Now compare this with a UBI that has no phase out and a 30% flat tax rate. You make $15,000, receive $12,000 UBI, pay $4500 (30% of the $15,000) in tax, so you net $7500 from the government. Your marginal rate is 30%, your effective rate is -50%. This is more progressive than the status quo on both metrics, despite being a "flat tax." Because all "flat tax" means is that everybody pays the same marginal rate, whereas any rational definition of "progressive" implies that lower income people are paying lower effective rates.
endymi0n 5y ago
The German CO2 as currently implemented gives back the credits via the electricity bill (essentially lowering the high taxes there, but could also be a credit). While not perfect, it strikes me as a rather great „90%“ solution since it gives back the tax in roughly the same proportion as energy use and cost (single/couple/family), so it‘s pretty fair to the poor as well.
lukifer 5y ago
The concept of a Pigovian tax [0] on externalities is to dissuade anti-social behavior by assigning it a price, while giving the proceeds right back to citizens as a universal dividend. It would actually function as a progressive tax, with the poorest collecting more than they pay in, and is heavily favored by economists [1]. [0] https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax [1] https://clcouncil.org/economists-statement/ https://clcouncil.org/economists-statement/
- hedora 5y ago
  In this case, the universal dividend could be invested in carbon capture. Carbon negative coal(). Woot! () Certainly causes cancer, respiratory damage and widespread property and ecological damage. Not available in all locations.

That's true of most consumption taxes, but this can be offset by giving a fixed tax credit to everyone. eg. if the median person is expected to pay $1000/yr in carbon taxes, then give them a yearly check for $1000 so it doesn't cost them extra. If they can reduce carbon on top of that, great! It's free money for them.

andruby 5y ago

Besides lowering income tax, what else could help offset this?

fighterpilot 5y ago
Lower sales tax.
hedora 5y ago
Universal basic income. (And, in the US, replacing the current income tax system with a flat tax. Due to loopholes, the US system is regressive after a certain income level. A flat tax isn’t)
- garraeth 5y ago
  Tangentially, is is presumptions to see the wave of stimulus checks as the genesis of a UBI system, not named as such, but essentially what we will end up with? Since many times government programs are never rolled back. Imagine: every 6 months or so, $X gets sent out.
  - klmadfejno 5y ago
    Sounds incredibly unlikely to me. It's also neither universal, nor basic. Which is perhaps healthier in the long run.
- klmadfejno 5y ago
  The us income tax may be regressive past certain income levels, but for the 99% of the population below those levels, it's a progressive system. A flat tax might be more progressive on average, weighted in dollars, but will undoubtedly be more regressive to the majority of poor people.
  - AnthonyMouse 5y ago
    > The us income tax may be regressive past certain income levels, but for the 99% of the population below those levels, it's a progressive system. "Regular people pay higher marginal rates than rich people, but other than that it's a progressive tax system" is basically the opposite of a progressive tax system. But on top of that, it isn't even true that the marginal rates paid in practice by lower income people are lower than those paid by middle income people, because of benefits phase outs. The system we currently have is worse than a flat tax across the board. The people at the bottom pay the highest marginal rates. The only sense in which it's progressive is the same one you get with a UBI and a flat tax, i.e. that the effective rates on the poor are lower because the taxes they pay are more than offset by the lump sum benefit(s).
    - klmadfejno 5y ago
      > "Regular people pay higher marginal rates than rich people, but other than that it's a progressive tax system" is basically the opposite of a progressive tax system. Not really what I said. If richer people progressively pay more tax for the bottom 99% of the population, that's arguably still a progressive system. The top 1% not paying more feels more like a problem in the implementation of what is otherwise a fairly progressive setup. I don't think I believe that poor people pay the highest marginal income tax rates given that some poor people pay none and all rich people have the amt. Other taxes, like sales tax, might make that true. A flat tax is more regressive than a progressive tax with loopholes cut out.
      - AnthonyMouse 5y ago
        > Not really what I said. If richer people progressively pay more tax for the bottom 99% of the population, that's arguably still a progressive system. Except that that isn't what happens for the people at the very top, i.e. the investment class. The capital gains rate (paid by billionaires) is lower than the top earned income rate (paid by millionaires) and billionaires and international corporations use tax avoidance strategies to reduce the amount of income they pay tax on to begin with. A flat tax can't be avoided in the same ways. > I don't think I believe that poor people pay the highest marginal income tax rates given that some poor people pay none and all rich people have the amt. You're confusing marginal rates with effective rates. Suppose you make $15,000/year and get $5000/year in government assistance. But the assistance programs phase out at various rates that add together to 80%. If you make an extra dollar, you lose $.25 of food assistance, $.30 of housing assistance and $.25 of childcare assistance, something like that. Because those benefits phase out. The government takes 80% of the marginal dollar. Even if your "income tax bracket" is 0%, your marginal tax rate is 80%. This is more than some higher income person paying a marginal rate of 25% or 35%. Your effective tax rate is -33%, because you made $15,000 and then "paid" -$5000 to the government, i.e. received $5000 in assistance. Now compare this with a UBI that has no phase out and a 30% flat tax rate. You make $15,000, receive $12,000 UBI, pay $4500 (30% of the $15,000) in tax, so you net $7500 from the government. Your marginal rate is 30%, your effective rate is -50%. This is more progressive than the status quo on both metrics, despite being a "flat tax." Because all "flat tax" means is that everybody pays the same marginal rate, whereas any rational definition of "progressive" implies that lower income people are paying lower effective rates.

endymi0n 5y ago

The German CO2 as currently implemented gives back the credits via the electricity bill (essentially lowering the high taxes there, but could also be a credit). While not perfect, it strikes me as a rather great „90%“ solution since it gives back the tax in roughly the same proportion as energy use and cost (single/couple/family), so it‘s pretty fair to the poor as well.

lukifer 5y ago

The concept of a Pigovian tax [0] on externalities is to dissuade anti-social behavior by assigning it a price, while giving the proceeds right back to citizens as a universal dividend. It would actually function as a progressive tax, with the poorest collecting more than they pay in, and is heavily favored by economists [1]. [0] https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax [1] https://clcouncil.org/economists-statement/ https://clcouncil.org/economists-statement/

hedora 5y ago
In this case, the universal dividend could be invested in carbon capture. Carbon negative coal(). Woot! () Certainly causes cancer, respiratory damage and widespread property and ecological damage. Not available in all locations.