Rachel #672: Taxes for Sustainability

[Tony Chenhansa <tonyc@cpeo.org>]

I think the "LAND VALUE TAX TO DISCOURAGE SPRAWL" section might be of
interest to this group.

Tony

-------- Original Message --------
Subject: Rachel #672: Taxes for Sustainability
Date: Sat, 16 Oct 1999 12:21:43 -0400 (EDT)
From: rachel@rachel.org
Reply-To: rachel@rachel.org
To: rachel-weekly@europe.std.com

=======================Electronic Edition========================
.                                                               .
.           RACHEL'S ENVIRONMENT & HEALTH WEEKLY #672           .
.                    ---October 14, 1999---                     .
.                          HEADLINES:                           .
.                   TAXES FOR SUSTAINABILITY                    .
.                          ==========                           .
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TAXES FOR SUSTAINABILITY

Sustainability means satisfying human needs fairly and without
destroying the ecosystems that support life. The conflict
between modern economies and the natural environment lies at the
heart of "sustainable use of the planet." (The conflict between
modern economies and "fairness" is also a huge problem, which we
will take up at a later date. Also, see Conference Announcement,
below, in this issue.)

How can modern economies be modified so they sustain ecosystems
instead of destroying them?

Tax policies can definitely help. The basic idea is to tax the
things that we don't want (such as pollution and waste), and
remove taxes from the things we do want (for example, work,
income and savings). Many economists have been promoting taxes
on pollution for years.[1]

The idea isn't to increase taxes -- in most cases, the idea is
to "shift" from one kind of tax to another kind without
increasing the total tax burden. Naturally, shifting taxes onto
pollution will raise the tax burden on polluters, who are often
wealthy and powerful people. Thus tax shifting may cause a
political fight but so does almost everything that benefits
large numbers of people these days.

A new report, just published this week by Sustainable America
(SA), describes 10 kinds of "environment friendly" taxes that
can replace traditional taxes.[2] The new taxes provide income
for government but much more importantly they provide incentives
for individuals and businesses to behave in ways that protect
the environment, thus harnessing "market forces" on behalf of
environmental protection.

Sustainable America's 10 taxes can alleviate a broad array of
environmental hazards: global warming; discharges of industrial
poisons into air and water; agricultural toxicants (fertilizers
and pesticides); smog created by motor vehicles; suburban sprawl
and urban blight; contaminated land (so-called "brownfields");
municipal garbage; excessive use of water; destruction of
forests; and depletion of fisheries. Environment-friendly taxes
can help solve many important problems. Taxes don't replace
other environmental policies (such as bans, precautionary
actions, and regulations), they supplement them.

The SA "environment-friendly taxes" report is much more than
just a traditional report -- it is an "organizer's kit" aimed at
citizens who want to mount campaigns to shift over to these new
taxes. The Kit gives you just about everything you would need to
conduct a campaign. For each of the 10 kinds of taxes, the Kit
describes:

* What is the problem that needs to be solved?

* What should be taxed to help solve it?

* Who should pay the tax?

* How should the resulting revenues be used?

* How will this tax change peoples' behavior?

* How will individuals and communities be affected?

* Who is using these policies today?

* Where can you get more information?

Here is a brief discussion of some of these "taxes for
sustainability":

LAND VALUE TAX TO DISCOURAGE SPRAWL

Urban sprawl destroys natural areas, paves over farm
land, eats up scarce open space, increases commuter traffic
and air pollution, isolates the poor in city centers, decreases
the urban tax base, reduces the jobs available to city
residents, increases the number of vacant or abandoned lots
and buildings in cities, destroys the traditional sense of
community found in urban neighborhoods, and increases
the tax burden on suburban residents.  To revitalize our
cities, and reduce automobile pollution, we need to curb
sprawl.[3]

The movement of people out of cities and into suburbs is being
promoted by many public policies. For example, governments
subsidize automobile travel (by paying for highways, traffic
control, law enforcement, parking, effects on public health, and
more). The Federal Housing Administration's (FHA) rules have
favored lending for single-family dwellings (suburban) but not
for multi-family units (city). FHA rules have also made it
cheaper to buy a new home (suburbs) than to renovate an older
one (city). Federal tax deductions for home mortgage interest
subsidize homeowners (suburbs) over renters (city). As suburban
development drives up the price of farmland in the suburbs,
inheritance taxes may force the children of farmers to sell the
farm just to pay the taxes. To revitalize cities and prevent
destructive sprawl, each of these subsidies to the suburbs
should be reduced or terminated.

But that is not all. SA suggests that the property tax could be
shifted in an interesting way to reduce the incentives for
sprawl. If the property tax were taken off of urban buildings
and focused on the land beneath the buildings, this would
penalize land speculation and would reward people who built on
their land. Land speculators hold land undeveloped, hoping to
earn a higher price in the future. This promotes "leap frog"
development out of the city and into the surrounding
countryside. The proposed shift from traditional property tax to
"land value tax" would penalize land speculation and encourage
urban development. Removing (or reducing) the tax on buildings
makes them cheaper to construct and operate, and more affordable
to buy or rent. Urban construction creates urban jobs.

As things stand now, as urban buildings decay, owners often
don't make repairs because their property tax will rise. Thus
the typical property tax creates an incentive toward suburban
sprawl and urban decay. Shifting the property tax from buildings
onto land reverses these incentives.

Taxing land more than buildings will reduce taxes for
homeowners. Land speculators, on the other hand, will see their
taxes rise. And there are other benefits. According to the Henry
George Institute in Columbia, Maryland, the city of Harrisburg,
Pennsylvania has shifted from a traditional property tax to a
"land value tax" system. There used to be 4200 abandoned
structures in Harrisburg, and now there are 500 because now no
one is penalized for repairing an old building. (See
www.smart.net/~hgeorge/ ).

There can be one major drawback to this property tax shift: it
could create an incentive to build on open spaces and
ecologically sensitive areas, so these areas will need to be
vigorously protected by zoning and by the establishment of
strict urban growth boundaries, such as have been enacted in
cities like Portland, Oregon. But of course such areas need
protection under the present property tax system, too.

Taxes on Pollution and Waste

The other 9 kinds of taxes advocated by Sustainable America will
be more familiar to many people -- a tax on carbon in fuels; a
tax on motor vehicle emissions; a tax on industrial pollution
discharges into air and water; a tax on municipal solid waste; a
tax on fertilizers and pesticides; a tax on cut timber; a tax on
wasteful uses of water (irrigation, and hydroelectric power);
and a tax on harvested fish.

In each case, the main aim and effect is to discourage an
activity that poisons the earth or that diminishes the earth's
capacity to provide an ongoing stream of benefits to us and to
future generations.

The SA ORGANIZER KIT has been very thoughtfully done. When there
are reasons to believe that a particular tax will have
regressive effects (penalizing the poor, for example), the KIT
says so and suggests remedies. If a tax has not been tried in
many locales, so that the outcomes are not well understood, the
KIT says so.

This ORGANIZER KIT makes a substantial contribution toward
translating "sustainability" into public policies that people
can advocate in their communities and at the state level.
There's a lot to chew on here. Good chewing, too.

The most important trend in the late 20th century has been the
campaign by transnational corporations to create "globalized
free markets," which is to say the unrestricted flow of
materials and money across international borders. American
corporations have spearheaded this world-wide campaign over
the last 30 years.

Here is a short list of the observable effects of "globalized
free market" policies: (1) Nation-states are losing the right to
enforce environmental regulations and other traditional norms of
civilized societies (progressive taxation, and the impartial
rule of law, for example); (2) Wages for working people are
under constant downward pressure toward a subsistence level; (3)
Native agriculture for local consumption is replaced by
mechanized industrial farming aimed at export markets; peasants
are forced off the land and into urban favelas, barrios and
slums; (4) Indigenous traditions, beliefs and ways of knowing
are dishonored and are forcibly replaced by "advanced" forms of
McCulture; (5) Inequalities in income and wealth are growing
larger in every country that participates in "structural
readjustments" or other requirements of the globalized free
market; (6) Traditional conservative political beliefs have
essentially disappeared, replaced by the ethic that now
energizes self-proclaimed "conservatives" in the U.S. (and
overseas): grasping self-interest and consumer choice are DE
FACTO the only real virtues; (7) The traditional role of
government -- to provide security for its citizens -- is
fundamentally undermined as social safety nets are repealed
around the world; (8) As a result of the foregoing, families and
communities are stressed and often disintegrating, lawlessness
is rising; as a remedy, the U.S. is experimenting with mass
imprisonment (with more than a million citizens imprisoned at
present); (9) Democratic forms are forcibly disappearing because
they are incompatible with the campaign for globalized free
markets, which is one of the largest attempts at social
engineering ever conceived; (10) In numerous countries,
including the U.S., right-wing extremists, hate-mongers and
fundamentalists are on the rise; (11) Wars over diminishing
resources, ethnicity and religion are sweeping the globe. Thus
the corporate cult of the "globalized free market" is attempting
to re-engineer the world, regardless of the consequences for
human societies, right before our eyes. (For documentation, see,
for example, John Gray, FALSE DAWN [New York: The New Press,
1998; ISBN 1-56584-521-8]; Gray is a professor at the London
School of Economics).

Happily, the effort to create a globalized free market is almost
certainly doomed to fail. People everywhere are organizing to
return common sense to public policies, to put corporations back
in their place, and to reclaim a semblance of democratic control
over key institutions.

An important conference called "Coordinating Challenges to
Corporate Globalization" has been organized by the Preamble
Center [Washington, D.C.] for November 12-14 in Chicago. The
cost is $75.00. For more information, E-mail the conference
staff at wep@preamble.org, or telephone Matt Siegel, project
manager, at (202) 265-3263.

============
[1] For example, see Allen Kneese and Charles Schultze,
POLLUTION, PRICES, AND PUBLIC POLICY (Washington, D.C.:
Brookings Institution, 1974). ISBN 0815749937.

[2] Elaine Gross, ENVIRONMENT-FRIENDLY TAXES ORGANIZER KIT (New
York: Sustainable America, 1999). Sustainable America, 42
Broadway, Suite 1740, New York, N.Y. 10004-1617. Tel. (212)
269-9550. Fax: (212) 269-9557. E-mail: sustamer@sanetwork.org.
Web: www.sanetwork.org. In the interest of full disclosure, I
should mention that my name is listed on the title
page as one of the authors of the ORGANIZER KIT.--P.M.

[3] See http://www.sierraclub.org/sprawl/report98/ and http://-
www.sierraclub.org/sprawl/report99/.                                                                                                                                                                                                 

Descriptor terms: taxes; taxation; public policies; sustainability;
sprawl; land use; pollution taxes; economics; 

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