

Find the Taxes That Do Double Duty - T_S_
http://www.nytimes.com/2011/02/20/business/economy/20view.html?ref=business

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athom
_Taxes levied on harmful activities kill two birds with one stone. They
generate desperately needed revenue while discouraging behaviors whose costs
greatly outweigh their benefits._

Actually, I've long been of the opinion that such taxes can lead to a
"dependency on the dependency." That is, while a government may intend to
discourage the "undesirable" activity it's taxing, it may in the long run grow
to depend on the revenue that tax generates, which may in turn reduce
incentive to discourage that activity in more effective ways, like anti-
smoking or anti-drinking campaigns. After all, do you _really_ want to
discourage the activities that build up your revenue?

Now, let's consider the payroll and income taxes Mr. Frank laments for
discouraging job creation and investment. While this may be true, maybe our
government could develop campaigns or programs to _encourage_ these
activities, and so counter the discouraging effects of taxation. I don't know
off the top of my head what such a program might look like, so I can't say how
feasible it would be. If nothing else, though, the potential for even greater
revenue from increasing _desirable_ activity sounds like a fairly strong
incentive to me.

I'm no economist, so maybe this "addiction to addiction" hypothesis is just
another crackpot theory. I'd be interested to hear if anyone competent has
actually explored this?

[slight edit for grammar]

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rexf
While it's plausible that a government could come to depend on such revenue
from undesirable acts, the act of collecting a tax from undesirable acts will
decrease the level of activity. In short, the tax is effective. It kills two
birds with one stone (less harmful activity, more tax revenue) as the article
describes.

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Duff
The problem is that we're pretty bad at predicting the long-term implications
of discouraging consumption.

Examples:

Tobacco. State revenues in particularly are dependent on tobacco taxes, which
were enacted under the theory that since smoking is bad for you, reducing
consumption would lower heath care costs. Unfortunately, the end result is a
regressive tax that gets more regressive over time as consumption drops --
without the corresponding reduction in health related costs.

Real Estate. Since World War 2, we have been encouraging the development of
new building of all kinds. We heavily subsidize personal mortgages, slums, and
commercial/retail, both directly via cash incentives and indirectly via
massive public works.

Environment. We discourage activity that damages the environment, but often
single out marginal activities with minimal impact. For example, New York now
fines construction workers $500 each for burning scrap wood in a burn barrel
for warmth, to protect society from air pollution. But it's ok to drive 70
miles to work every day.

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T_S_
Hacking the economy...

\+ Carbon Tax

\- Sales Tax

commit -m"Deter consumption in proportion to its harm."

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anonymoushn
_Clearly, reduced spending alone can’t solve our deficit problem_

I respectfully disagree.

