September 11, 2008

TAX WHAT YOU WANT LESS OF:

The Pigou Club Goes to Washington (Ted Gayer, September 10, 2008, American)

Members of the “Pigou Club” should pay close attention now that energy policy has become a dominant issue in Washington. So named by Harvard economist Greg Mankiw, the club consists of economists and pundits who support an increase in taxes on pollution-generating activities. (I’ve been a member since 2006.) The economic rationale is simple: pollution imposes costs on society, so the taxes adjust market prices to account for these costs and thus improve general welfare.

Yet advocates of higher pollution taxes rarely draw attention to another recommendation of the Pigou Club—that the revenues collected from the pollution tax should be used to offset existing taxes that distort economic incentives.


As well as President Bush has done in other areas, as regards the Middle East, it's too bad he hasn't acted more forcefully to force the transition away from oil, particularly since taxing consumption rather than income and savings is central to neoconomics.

Posted by Orrin Judd at September 11, 2008 6:13 AM
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