Thursday, July 05, 2012

Mankiw, Pigou, and You!! A Love Story (not really).

Greg Mankiw, the author of your text, posts fairly often on his blog about the Pigou Club (a group of economists and others that favor using tax policy to curb economic activity with negative externalities).  See this link here

The article gives some good food for thought.  Bauman and Ling Hsu do more than just argue that polluting industries should be taxed heavily, pointing out that the higher carbon taxes can finance lower corporate tax rates which is better for growth.

12 comments:

Isabel said...

It is definitely a good idea to include a carbon tax which would help environment, but I find that the only problem about it would be that corporations will not be able to compete as well with the rest of the world. Other countries might not want to establish a carbon tax, therefore, they will still produce the same amounts while those countries who place a carbon tax will produce less.

Jasmine Byrd said...

The idea of substituting an income, payroll, or workers tax for an emissions tax does sound enticing. However, some businesses would be sacrificing revenue and in turn probably won't produce as many goods as they would have if there wasn't a tax.

Matt Freeman said...

I have mixed feelings about the idea of a carbon tax. While I understand that it will benefit the environment and lower taxes for households, my concern is how it would affect the large energy companies in Oklahoma? Large energy companies such as Devon, Chesapeake, and Continental have done so much for our state economy and Oklahoma City especially. I wonder if a carbon tax would have a negative impact on them. It may not at all, just some food for thought. (Energy companies use a lot of carbon right?)

Trent said...

Even If a carbon tax was put into place the likelyhood of the profit made from the tax actually being put towards what the article states is not high. Our government does not have a reputation for being frugal or saving its people money by cutting taxes for the people. I think a carbon tax like the one mentioned would be beneficial for the environment but as far as benefitting income-tax and essentially allowing us to monitor how much we pay in taxes I don't think it would have any major effect.

James Davies said...

Interesting article, presented in a manner that makes it seem almost like a no brainer, and maybe it is. But it seems to me that this is a highly discriminatory tax. Oil companies would not like this and I do believe that they are a huge source of income in markets like Texas and Oklahoma. Would taking these companies almost ruin these markets, or is there enough market independence from oil? Just a thought. Maybe using a similar tax swap, but only in LA/NYC where their main industries are not going to be more heavily taxed.

Anonymous said...

I think it's a good idea to tax carbon emissions rather than taxes on payroll or investment. While, I'm not educated enough on the issue of how bad carbon emissions are for the environment, I think these taxes should be kept at a minimum. For example, if the consumer demand for eco friendly vehicles were so great, then people would no longer be buying such environmentally "unfriendly" vehicles, which hasn't happened.

Ian Littlejohn said...

I have to agree with Matt iam also having mixed feelings about having a carbon tax. Yes taing people would help the environment.However what about the countries that dont agree on a carbon tax will one or two countires having a carbon tax really help the environment or will the tax just be another tax

Cory Nissen said...

A carbon tax would be a great idea if things actually worked out like predicted in the article. If America was the only place to adopt this tax, what would prevent larger corporations from outsourcing more than they already do to avoid this tax? I guess it would come down to how much money the tax would earn to lower taxes for individuals and corporations vs. how much it would cost company's to outsource to avoid the tax.

Mackenzie Schafer said...

What an amazing concept to tax negative things that we can choose to control instead of things we can't. Bauman makes an excellent case for a carbon tax and how it could help America.

Mason Jones said...

I think trying to tax companies for polluting is a good idea to help the environment. However really puts a company at a disadvantage with any company in another country. So the environmental problems should be delt with but perhaps in a different way.

Eid Alkhaldi said...

I don't think that taxing pollution is the most efficient way to reduce pollution and still make the best out of our resources. I believe that if the government sells some kind of permits of pollution to the companies, is a better way of managing this problem.

Nick Goldman said...

A carbon tax will seem like a good idea on paper but in reality it may not work. A corporation will have to take the risk of sacrificing profits and in turn the quality of the services it can provide if it has to worry about a tax. This can hurt the industry in the race for finding alternate energy sources.