A Clear Call For The Freedom Tax

Today in the NY times, in “Show Us The Ball” Thomas Friedman has come out strongly in favor of the solution that we have explored seriously since 2003 in various NESEA conferences – the Freedom Tax. He argues forcefully that the administration’s proposed “Cap and Trade” solutions are a tax masquerading as something other than a tax, but that charade is over. He encourages President Obama to treat the question of reducing and taxing carbon emissions more directly and effectively.

Friedman argues strongly for a revenue neutral direct carbon tax that is offset by reductions in payroll taxes. He also argues convincingly that rather than selling a carbon tax as an environmental issue with long term climate impacts, the administration’s carbon policy should be sold by National Security Adviser General James Jones as an urgent national security issue. And above all, he encourages President Obama to do what he has promised – promote clear, transparent and effective solutions.

After the 2003 NESEA conference, Alex Wilson wrote “A Freedom Tax on Gasoline” in Environmental Building News. I recently wrote “Actually Mr. President, There Is A Solution” and “The Problems With Cap & Trade” here.

The Freedom Tax is the clearest and best way to start sending effective price signals to the market place on the “economic externalities” of fossil fuels. It addresses our massive trade imbalances and by discouraging petroleum use, it reduces our payments of “taxes” to the sovereign oil companies of Saudi Arabia, Russia, Iran, Venezuela and others who have proven to not always put Americas best interests first. It stimulates the markets for clean energy, energy efficiency and fuel efficient vehicles.

And the Freedom Tax reduces payroll taxes, America’s most regressive form of taxation. Reducing payroll taxes will stimulate the economy more effectively than the current federal stimulus package.

Friedman encourages support of draft legislation being proposed by Representative John B. Larson, chairman of the House Democratic Caucus, calling for “a per-unit tax on the carbon-dioxide content of fossil fuels” while reducing payroll taxes. As Friedman suggests “People get that — and simplicity matters. Americans will be willing to pay a tax for their children to be less threatened, breathe cleaner air and live in a more sustainable world with a stronger America.”

The tired argument that Cap and Trade is preferable to a direct Carbon Tax because a straight forward tax will never get through congress is just silly. Opponents to Cap and Trade are already blasting it as a huge hidden tax. The fact of the matter is there is heavy support for a straight forward Freedom Tax across all corners of the political spectrum. An example of some thought leaders who have supported carbon taxes here at “Who Else Supports Tax Shifting” (though it should be noted that some of those folks have been less clear in their position since joining the government).

The political challenges of a straight forward carbon tax are clearly no more formidable than the very real practical policy problems with Cap and Trade.

We should all be encouraging our congressional leaders to support Representative Larson’s bill and create a clear straight forward path to putting a price signal in the market place for the “economic externalities” of our fossil fuel addiction, while at the same time reducing the tax on productive activities like creating jobs and going to work.

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Filed under Climate Policy, Economic Policy, Energy Policy

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