27 Sep Let Economics help fight climate change
Posted Sept. 21, 2015 from Seattle,WA; updated Oct 5, 2015
I ran an ad in the A-section of the Seattle Times on Tuesday Sept. 22, 2015, that presents my belief that the green position on the upcoming Seattle Transportation Levy is No. I’m running it again on Oct 6, 2015.
It’s an age-old practice in the US to fund the roadway—often all county roads and sometimes portions of state roads—with revenue from the property tax. However, it is a bad practice because it undermines the ability of the market to efficiently equilibrate the supply of roads with the demand for roads.
In other words, because the driver is not paying for the cost of the roadway– (they may pay property tax for the road but not in their capacity as a road user and not proportional to the intensity of their use of the roadway) — they experience the road’s cost as being lower than it really is. Thus they will use more of it, and be less inclined to seek alternatives to using it.
While climate-altering pollution is the concern I expressed in the ad, it should be noted that two other major problems—congestion and public health—are also adversely affected when government subsidizes driving, so a person can be a climate-change denier and still agree with me.
The ad falls into the broad two-part strategy that I and many others advocate in dealing with climate-change.
Remove all government subsidies for fossil fuels (or simply all government subsidies for energy of any kind.)
Put a price on Carbon.
To put a price on Carbon, the best way in WA state is I-732 by Carbon Washington. This is thrilling as Washington could become the first state to institute a Carbon Tax. 732 would put a price on every ton of Carbon that increased at the same time the State Sales tax and the B & O tax would be decreased by an equivalent amount. Sign it soon, if you can, collect signatures if you can.
In an email to supporters Carbon Washington leader Yorum Bauman recently posted a link to a Wall Street Journal article by Richard Revesz that advocated the approach of zeroing out subsidies and putting a price on Carbon. Revesz points out that we subsidize fossil fuels to the tune of 4.7 billion a year with favorable treatment of asset-depreciation accounting. Here’s the URL: http://blogs.wsj.com/experts/2015/09/15/lets-cut-all-energy-subsidies-and-start-taxing-pollution/
There are many other forms of subsidy for fossil fuels in addition to favorable tax treatment. Eminent Domain for pipelines is a government subsidy not available to other industries, and it is not only a subsidy but a violation of the US Constitution which restricts Eminent Domain to only uses involving a “public good.” There are many, many more also, some hidden. A huge one is the below-market royalties and fees charged the fossil fuel industry for drilling and mining on public lands. A more abstract subsidy is that the owners of the roadway infrastructure, the citizen, never earns a profit from her/his ownership, as any private owner would in a free market. Throughout Europe the citizen does turn a profit from their ownership of the roadway and it helps pay the cost of government. (I’m not suggesting growing government, as with I-732, there are plenty of regressive taxes that can be lowered to make any change revenue-neutral).