Recently I published an article where I identified Maine as being the poorest of the 48 continental US states, contrasted Maine's tax and budget policy with that of the wealthiest state (Wyoming), and made some recommendations. The most important recommendation was that Maine eliminate its corporate and personal income tax and replace it with a tax on carbon (i.e., oil, natural gas and coal). I thought it would be wise to respond to some of the comments made about the article and expand on some of the reasoning behind the approach I suggest, from my perspective as (in my mind anyway) a "practical libertarian." by James Oaksun
(libertarian)
Saturday, January 2, 2010
Recently I published an article ([link edited for length]) where I identified my home state of Maine as being the poorest of the 48 continental US states, contrasted Maine's tax and budget policy with that of the wealthiest state (Wyoming), and made some recommendations. The most important recommendation was that Maine eliminate its corporate and personal income tax and replace it with a tax on carbon (i.e., oil, natural gas and coal). I thought it would be wise to respond to some of the comments made about the article and expand on some of the reasoning behind the approach I suggest, from my perspective as (in my mind anyway) a "practical libertarian."
1. The tax is too high. Many commented that the proposed tax ($2/gal on liquid fuels, $5/tcf on natural gas and $200/ton on coal) was excessive and would represent an undue burden for many people. I can respond to this in a number of different ways.First, it highlights the insidiousness of tax withholding. Many people are completely unaware of how much tax they are paying, since the government painlessly (!) deducts the tax immediately from their paychecks. The carbon tax I suggest in the article merely replaces the current revenue of the income tax, and, perhaps more importantly, moves it out into the open where everyone can see how high it is and thus how expensive their current form of government is.
There is a further reason for my proposal. Most libertarians (myself included) believe that government should become smaller and less intrusive. "How" that should happen, is a matter for discussion among various factions in the libertarian movement. For myself, I believe that over time the government can become dramatically smaller, but that this will take some years to effect.
If a state or nation uses the income tax as a prime funding mechanism, revenues to the central government will always be biased upward over time. If we can move toward taxation of a resource that will be used less over time, the tax base will shrink. Then, those who advocate new government programs will have to either impose new additional taxes, or shrink or eliminate existing programs.
As we transition to a more libertarian society we want to get to a place where the machinery of government is more starved of its fuel (i.e., money). A carbon tax is an ideal mechanism for this.
2. We're cooking the Earth but don't blame me!
I am not going to enter the debate about global warming fact or fiction. Let's assume for the moment that the case for AGW is correct and that we are doing damage. Well, the obvious remedy is to figure out how, over time, to use a lot less fossil fuel. Taxing the offending items is the obvious remedy.
Yet AGW adherents seem to believe that "someone else" should pay more. Well, time to put that to rest. If we really are cooking the planet, we are all going to have to recognize the amount of fuel we use and pay accordingly.
3. Somebody has to use less fossil fuel just not me!
Many commenters said we needed to develop alternative sources of energy. What better way to do that than to make existing sources more expensive. And if that encourages people to stop living in sieve like structures, and stop driving that 10-15 mpg car, well so be it.
4. Your idea is stupid but I have nothing else to offer as alternative.
I consider this unacceptable. Maybe some people are happy with Maine being in permanent last place among states. I am not. Tinkering around the edges is not going to solve this problem. Only a change in thinking and paradigm will blast us out of last place.
5. You're not even a libertarian. If you were, you'd advocate eliminating the income tax and replacing it with nothing. Time to cut the state government 50 percent, today.
This is just unrealistic. That is why I call myself "The Practical Libertarian." I am a long term radical and a short term pragmatist. Government will wither and die when it is no longer needed, when people are shown over time a better way to organize and live. But it will take time.
In another article ([link edited for length]) I argued for implementing this idea at the national level wiping out the Internal Revenue Code altogether and replacing with a carbon tax. Just kill it off! Don't tinker, wipe it out.
There is a path to a freer society with a much smaller government. But there is a zone of possible answers that can win an election. I want to win elections, not have endless debates that lead nowhere. Maine can become a freer, more prosperous state. And libertarians can see America become a freer and more prosperous nation.
The views expressed
in this article are those of James Oaksun only and
do not represent the views of Nolan Chart, LLC or its affiliates.
James Oaksun is solely responsible for the contents
of this article and is not an employee or otherwise affiliated
with Nolan Chart, LLC in his/her role as a columnist.
The Comprehensive Annual Financial Report for the state of Maine sheds interesting light onto your position. You devote considerable effort toward innovative new taxation schemes aimed at satisfying the state's appetite for the people's income while the "business activities" indicated in the report demonstrate perhaps a case for tax reduction as of FY 2008 (latest available issue).
Also, in light of the "climategate" issue, any so-called "carbon tax" will fly like a lead balloon.
