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 tax.  
  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. Doing both, gradually, at the same time, is the idea behind “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 a demand for 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 animal’s chemical metabolism.  
    d. At 3%, carbon dioxide is weakly narcotic, giving rise to deep breathing, reduced hearing, headache, increase in blood pressure, and pulse rate.  
2. Our government already regulates the production and import of carbon-based fuels so collecting this tax will not require a new bureaucracy:
    a. Every oil well is regulated.
    b. Every coal mine is regulated.  
    c. Imports are regulated.  
  Answer 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. The idea is to reduce the amount 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. At the end of ten years, raising the exemption on payroll tax at $150 per month would exempt $18,000 from everyone’s income tax.  
    c. The goal is to not collect any FICA or IRS payroll taxes from everyone’s paycheck earning less than $18,000 per year.  
    d. Raising the carbon tax at a rate to increase the price of gasoline $0.07 per month over ten years would make it $10 per gallon.  
    e. In some countries the price of gasoline is already $10 per gallon. This is the result of public tax policy in that country, because gasoline is a world-wide commodity.  
    f. Making these policy changes simultaneously will result in neither a 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. Raising the fuel efficiency of our systems will create skilled jobs.  
  Results of the Green Energy Exchange:  
  1. Those living a lavish lifestyle will pay more.  
  2. Those living a frugal lifestyle will pay less.  
  3. Public transportation, Dial-A-Ride, and ride-sharing will become the transportation modes of choice.  
  4. Renewable energy sector will thrive without needing government subsidies.  
  Why the name; “Green Energy Exchange”  
  1. The word “Tax” or “Fee” will put an audience off before you can make your pitch.  
  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.  
  3. “Heat” or “Fuel” are totally different than “Energy”, so be sure to use these terms correctly  
    An example of ‘heat’ is a home gas furnace.
An example of ‘energy’ is an electric car.
‘Heat’ and ‘energy’ are related by the following relationship:
(Heat) minus [(Ambient Temperature) times (Entropy)] equals (Energy)
    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 one or more BTU’s of ‘heat’.  
  Sending every household, a carbon tax Rebate check would not accomplish our goals because:  
  1. Wastes the opportunity to make either an ecological or societal point.  
  2. Lacks permanence in that the check will be forgotten as soon as it Is spent.  
  3. Identifying who should get the check would be very difficult.  
James E Clark   JClark4626@aol.com