Replacing Payroll Taxes with Carbon Taxes

The New Yorker's Hendrik Hertzberg agrees with Ross Douthat's proposal to end the payroll tax, and takes the idea a step further.

By all means let’s have a stiff carbon tax—a whole carbon-tax package, one that folds in levies on other pollutants and on the wasteful or dangerous use of natural resources in general. And, at the same time, let’s make the carbon tax the source of the trust fund. Call it the Dignity for Seniors tax, because that’s what it would provide. Or the National Patrimony tax, because that’s what it would preserve. Or the Social and National Security tax, because it would underwrite both kinds.

Or, maybe, the More Payrolls Tax. As John Marshall and Daniel Webster long ago pointed out, the power to tax involves the power to destroy. With the More Payrolls Tax, we would no longer be using that power to destroy jobs. We’d be using it to create them—and, at the same time, to destroy (well, mitigate) global warming. We’d be nudging investment decisions in a socially and environmentally responsible direction by making it relatively cheaper to use human energy and relatively dearer to use the fossil-fuel kind. We’d be putting a particular dent in youth unemployment, because the payroll tax is a bigger percentage drag on low-wage entry-level jobs than on high-salaried ones.

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Justin Green

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