Unexplored Revenues

The flipside of the Simpson-Bowles document’s unsound aggregate cap on revenue is that they were very uncreative in their exploration of revenue options. For example, what about a tax on greenhouse gas emissions? The mere fact that the conservative movement is currently engaged in a massive fit of pretending that greenhouse gas emissions aren’t a problem doesn’t change the fact that greenhouse gas emissions are, in fact, a problem. Taxing them would reduce the quantity of greenhouse gas emissions and help mitigate the problem. It also creates revenue.

If Alan Simpson’s reason for thinking a tax on greenhouse gas emissions is a bad idea is that Simpson is a nutcase who doesn’t believe that greenhouse gas emissions contribute to climate change, then Erskine Bowles should have made him write that on a piece of paper. Then we could look at the proposal and know it’s co-written by a nutcase. It wouldn’t surprise me. There are a lot of nutcases in Washington life. But it’s important to know these things.

The federal alcohol tax’s inflation-adjusted value is currently much lower than it was in the 1950s even though the country as a whole is much richer. Mark Kleiman observes that putting it back up closer to where it was “would bring in on the order of $15 billion a year in net revenue, after adjusting for the (entirely desirable) reduction in volume [...] in addition to the revenue it brought in, reduce violent crime and auto fatalities by something like 5% each: that’s about 800 fewer murders, 10,000 fewer rapes, and 1700 people not killed on the highways.” To me, that sounds like a better idea than cutting spending on anti-poverty programs. And of course there’s the idea of a Financial Activities Tax as proposed by the International Monetary Fund.

There’s just no evidence that any of these ideas were explored.