Reconciling Economic and Environmental Goals

By Repetto, Robert; Dower, Roger C. | Issues in Science and Technology, Winter 1992 | Go to article overview

Reconciling Economic and Environmental Goals


Repetto, Robert, Dower, Roger C., Issues in Science and Technology


Faster economic progress is compatible with better environmental quality, as the Clinton-Gore campaign asserted. But achieving both these objectives will require the new administration to resolve the country's economic problems with policies that promote rather than sacrifice environmental goals. The new administration has pledged to raise investment, improve education and health care, reduce the deficit, and ease the economic burden on ordinary people. Doing all of this will require raising additional government revenues, but fairly and in ways that don't depress the economy.

Taxes may be inevitable, but there's nothing inevitable about what we tax. We could reduce the burden of the tax system by making more use of so-called "green fees"--charges on pollution and other kinds of environmentally damaging activities. Because most people don't think about the damages such activities impose on others, environmental damage is excessive. The economy suffers hundreds of billions of dollars of losses each year from illness, natural-resource damage, and higher industrial costs as the result of pollution, congestion, and inefficient resource use. Green fees can address many of these problems more efficiently than command-and-control regulations and simultaneously raise tens of billions in additional government revenues.

Shifting the tax burden in this way promises a double economic benefit. At present, nearly 90 percent of federal revenues comes from taxes on payrolls, incomes, and profits. By weighing so heavily on everyone who works, saves, invests, or runs a successful business, these taxes penalize the very activities that make our economy productive. It would be far preferable to inflict a penalty on those who cost the economy money through their environmentally harmful actions or wasteful use of energy and natural resources.

Taxes on income and profit sap the economy in many ways. By lowering take-home pay, income taxes discourage some workers, who either put in fewer hours or stop working entirely. Payroll taxes depress job creation by prompting employers to find cheaper alternatives to hiring new workers, such as automating or moving operations overseas. Taxes on income from investments induce people to seek tax shelters or to save less. Tax shelters divert capital from more productive investments, and lower savings rates diminish capital formation. For these reasons, each additional dollar in government revenue raised through higher income-tax rates lowers private income by $1.40 to $1.60.

The logic of environmental charges is powerful for state and local governments as well. The recession has forced them to cut spending and raise taxes, but tax increases spell double trouble for their economies. Besides discouraging work and investment, as federal taxes do, state and local tax hikes trigger the flight of labor and capital to areas with lower taxes. Raising revenues through measures that improve local environmental quality--while reducing the government's expenses for environmental cleanup and enforcement of regulations--makes more sense than raising taxes that drive business and workers away. So far, although 43 states use environmental charges to some extent, their potential has barely been tapped.

What's more, in many cases, such a tax shift can protect the environment better and more cheaply than the current command-and-control system can. Studies have shown that the current bill for environmental protection--over $120 billion per year--could be reduced by one-third to one-half if more effective market-based policies were used. Regulations don't work if too many people are contributing to a problem or if conditions are changing so fast that regulation can't keep up. Traffic, trash, and carbon dioxide emissions are three such problems, and environmental charges can help solve them.

Our analysis of green fees for these and other environmental problems shows that the U.S. economy could shift as much as $100 billion to $150 billion in federal, state, and local revenues away from "goods" such as income and investment and onto these "bads. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Reconciling Economic and Environmental Goals
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.