Taxing Our Way to a Green America

Democrats are committed to advancing the green agenda through regulation. But there's a better way that protects freedom... and raises money.

The green agenda has imposed upon us the elimination of Thomas Edison’s incandescent bulb -- an invention so iconic that cartoonists use it as a symbol of a bright idea.  It will be banned and illegal to sell such a harmless item in the United States after 2012 under current law.  I weep for the cartoonists who will have to draw those mercury filled curly things (the “swirl”) we will now call “light bulbs.”

Also, Mayor Bloomberg in New York City has passed laws against transfats and many cities and states have banned smoking in bars outright. For years, the large gallon tanks on toilets have been illegal and old tanks pass illegally like samizdat across the land.

Not coincidentally, the states and jurisdictions imposing the most such regulations and bans, are also those in the most perilous financial condition.  E.g. California: the first state to ban smoking in bars and some incandescent lights.

The federal government, in accord with the proclivities of the same type of politicians who support such bans, is also in perilous financial shape.  Nonetheless, the Obama administration now states it will use regulatory powers to prohibit certain levels of carbon dioxide emissions.  The Republican Party should take a page from the marijuana liberationists and substitute, in any case where such a ban is current law, a tax instead.  In the first instance they could oppose both taxes and regulatory bans, but where bad laws and regulations have already been made, another avenue must be tried.

The Republicans only control the House.  They cannot hope to have the repeal of legislation on the light bulb, or the elimination of certain prescription drugs, or new regulations on greenhouse gasses passed on their own.  However, if they could hold out a carrot to the Democrats they might be able to change the banners’ behavior.  There is no carrot more delicious to a Democrat than a tax.

First, on emissions, a battle between the House and the EPA is gearing up.  In order to forestall this, the House should agree to tax non-Nafta, non-NATO oil imports at $20 a barrel.  A coalition could be formed between national security conservatives, anti-regulation libertarians and revenue seeking Democrats to pass such a bill.  According to this chart of oil imports (does the Virgin Islands refine petroleum?) excluding Britain, Canada and Mexico, the U.S. imported in 2010 at least 6,138,000 barrels of petroleum per day from these countries.  Not counting the downturn in imports such a tax would produce, it would generate $122,760,000 to the treasury every day or over four billion a year in revenue.  House Republicans could trade an end to domestic subsidies like ethanol and wind, and no new EPA regulations for such a tax.  Such a Pigovian proposal could thus cut spending, reduce regulation and increase revenue while disempowering bad international actors like Venezuela and Algeria.  The net gain to the treasury from subsidy elimination and tax collection would exceed 10 billion a year.  Such a tax is politically better than a gas tax because the latter does not capture 30% of the uses of petroleum and seems aimed at motorists rather than foreign oil producers.

Second, a dollar incandescent light bulb tax -- rather than a ban -- could raise as much as a billion a year.  (In 2005, two billion light bulbs were sold in the U.S.  I assume most were Edison’s).  The “swirl” lights are supposed to last longer but I have not found this to be the case and the costs of safe disposal are externalities regulation has not addressed.  Once again, the government would put a big, taxing thumb on the scale in favor of the greens’ favorite form of light (expensive and stupid looking), the government would benefit from revenue and Americans would not be deprived of both convenience and an icon of American ingenuity.

Third, Republicans should find other regulatory bans that they believe are both stupid and counterproductive (like the regular toilet tank ban).  They should propose to legalize the offending product and replace it with a tax designed to produce revenue.  A regulation costs the government money in enforcement and creates a black market that also requires policing.  While this is inevitable for certain purposes, for ordinary household products that have suddenly fallen into disfavor, the Republican alternative should be a tax designed to capture the externalities of the product in question but allow Americans the freedom to buy it at the higher taxed price.  Even Grover Norquist might get on board if in each case if the tax was in effect removing the 100% tax of a regulation.

Fourth, on the state level, revenue strapped Republican majority states can begin to make the arguments that have brought gambling to practically every state in the nation.  They need the revenue.  Instead of smoking bans there should be expensive licenses to allow smoking establishments.  In Gotham, a “transfat” license to help a cash-strapped New York could be suggested.

Finally, Republicans should begin to ridicule the banners of normal products in every day household use.  In California, leaf blowers and outdoor barbecue grills have been suggested for elimination.  The American people will gravitate to the party protecting their right to use American inventions considered both useful and harmless; and begin to identify the Democrats not with freedom but with its opposite.