James E Clark


reducing payroll tax and taxing carbon-based fuel

will be called a

  Need or Justification:  
  1. Society needs to promote jobs, yet we suppress jobs with payroll taxs.  
  2. Society should discourage adding carbon dioxide to the atmosphere, yet we use public policy to make it attractive to burn carbon-containing fuels.  
  3. Government should reverse these two policies; which would then promote jobs by reducing payroll tax, and discourage consumption of carbon-containing fuel with a tax.  
  4. Society would need to insulate the lowest paid workers from a carbon tax  Increasing the minimum wage would offer that protection.  
  5. Doing all three, gradually, in concert, is the idea behind the “Green Energy Exchange”.  
  Support for reducing the payroll tax:  
1. Today’s policy of the federal government collecting payroll tax from those in poverty and then provide benefits to those very same workers with that tax money because they are impoverished is illogical and inefficient.
  2. Today’s policy of collecting payroll tax creates an informal economy that does not pay that tax.  
  3. The Social Security tax is 6.2%, plus Medicare tax of 1.45%, plus employers pay another 6.2%, which makes nearly a 14% tax on the first dollar of earning.  
  4. A portion of Social Security benefits would need to come from the carbon tax.  
  5. The increased paycheck, for a worker earning more than the minimum $18,000, will help purchase approximately four gallons of increased-priced gasoline per week.  
  Support for taxing carbon-based fuel:  
1. The US is adding more than its share (20 tons per person per year versus China at 5 tons) of carbon dioxide to the whole world’s atmosphere.  This is unsustainable:
    a. Current atmospheric concentration is 0.04%v. This is up 0.02% in only 60 years.
    b. Medically derived work rules set the maximum allowable workplace concentration at 0.5% for 8 hours for an adult male. For women and children, the maximum would likely be quite a bit less.  
    c. The effect of 1 to 1.5% has a measurable effect on an animal’s chemical metabolism.  
2. Our government already regulates the production and import of carbon-based fuels so collecting this tax will not require a new bureaucracy:
    a. The production of every oil and gas well is accounted for and regulated.
    b. The production of every coal mine is accounted for and regulated.  
    c. Imports are accounted for and regulated.  
  Answers to criticism of a carbon tax:  
1. It will raise the cost of exported goods.
    a. Yes, it will raise the cost of exported coal and oil. But the idea is to reduce the amount of coal and oil produced.
    b. Increasing carbon-based fuel cost will increase the cost of energy intensive products.  
    c. Decreasing labor cost will reduce the cost of labor intensive products.  
    d. The selling price of produced-goods includes the sum of government taxes from both fuel and labor.  
    e. A carbon tax will not necessarily increase US costs and therefore send production of goods overseas because this proposal will simultaneously decrease the cost of labor by an amount equal to the carbon tax.  
2. This will cause a major economic disruption.
    a. Implementing the Green Energy Exchange needs to be gradual and predictable.
    b. Raising the exemption on payroll tax at a rate of $150 per month would exempt $18,000 from everyone’s income tax at the end of ten years.  
    c. The goal is to not collect any FICA or IRS payroll taxes from anyone’s paycheck for the first $18,000 per year of income.  
    d. Gradually raising the carbon tax at a rate to increase the price of gasoline by $0.05 per month would result in gasoline at a price of $8 per gallon at the end of ten years.  
    e. In 25 countries the price of gasoline is over $6 per gallon. This is the result of public policy and not the cost of producing the commodity gasoline.  
    f. Making these policy changes simultaneously will result in neither an economic windfall nor a shortfall for the government.  
  Benefits from a Green Energy Exchange  
  1. Recycling business will thrive.  
  2. Less carbon dioxide will be added to the atmosphere.  
  3. Skilled jobs will be created as there will be a demand to raise the fuel efficiency of our systems  .  
  Results of the Green Energy Exchange:  
  1. Those living a lavish lifestyle will indeed pay more.  
  2. Those living a frugal lifestyle will likely reap a benefit.  
  3. Public transportation, such as Dial-A-Ride, and ride-sharing will become the transportation modes of choice.  
  4. Renewable and green energy enterprises will thrive without needing government subsidies.  
  Why the name; “Green Energy Exchange”  
  1. The word “Tax” or “Fee” will put an audience off before the idea behind it can be explained.  
  2. Use the term “carbon based fuel” instead of “fossil based fuel”. “Fossil fuel” is a self-serving term used by fuel companies to suggests that carbon-based fuel is rare and even if we burn it all, the atmosphere will be fine because the dinosaurs were fine.  
  3. “Heat” or “Fuel” are totally different than “Energy”.  So, be sure to use these terms correctly  
    An example of ‘heat’ is a home natural-gas furnace.
An example of ‘energy’ is the battery in an electric car.
‘Heat’ and ‘energy’ are related by the  relationship:
(Heat) minus [(Ambient Temperature) times (Entropy)] equals (Energy).  H-TS=E
Therefore you see that:
    a. It requires more than one BTU of ‘heat’ to make a single BTU of ‘energy’.
    b. A single BTU of ‘energy’ can be converted to more than one BTU’s of ‘heat’.  
  Sending every household, a carbon-tax-rebate check would not accomplish our goal because:  
  1. We need a change in behavior and a check is unlikely to cause a change in behavior.  
  2. This action would waste the opportunity to make either an ecological or societal point.  
  3. Lacks permanence in that the check will be forgotten as soon as it Is spent.  
  3. Identifying who should get the check would be difficult.  
James E Clark   JClark4626@aol.com