I always wonder why we tax things that we otherwise want to encourage. It's a human bias, we tax what everyone does because we think it's "fair", in the sense t

I always wonder why we tax things that we otherwise want to encourage. It's a human bias, we tax what everyone does because we think it's "fair", in the sense that everyone supports it. If you've studied micro-economy, you know that a tax discourages demand and diminishes the offer. What if we taxed what we wanted to discourage? We already have high taxes on alcohol, which is good because there are many side-effects that society has to support: Car accidents, busy hospitals on Saturday evening, violence at home, and just the loss of people who would be valuable to society. In that sense, high taxes on alcohol are a mere compensation for the cost of alcohol to society. Let's have no tax on labour and high tax on pollution. You may say it would be unfair because the poor would pay higher total taxes. I don't think that's proven. If you could however demonstrate that poor people pollute more (eg. "Poor people commute a lot, using cheap cars, therefore consume more petrol"), we should re-adjust our minimum wage, our whole society, maybe our whole real estate assignment, because we'd be doing it real wrong. Actually, that's the point: With tax on labour, we create a lot of incentives that are contrary to organizing a world which pollute less. So the whole debate about "which one of tax on capital gains or tax on labour should be higher" is flawed. None of those should be high. Tax on pollution (and more generally things which create a cost for society) should be higher. It's called "externalities".