Making a lean-green tax shift

Al Gore gave a speech at New York University recently in which he proposed lowering the payroll tax and substituting a "carbon tax" to make up the lost revenue. Conservatives and progressives, tax-cut hawks and Inconvenient Truth tellers alike should pay attention. Viewed from the right or left, tax shifting is an idea whose time has come.
The "carbon tax" is essentially a tax on gas emitted from burning fossil fuels. To combat global warming, Gore wants to freeze America's carbon emissions at current levels by taxing oil and coal emissions and using the revenues to reduce payroll taxes that finance Social Security, Medicare and unemployment benefits.
It's a simple enough formula: tax anything heavily enough and you get less of it. Tax employment enough and fewer people work. Tax energy enough and companies and consumers use less energy, with less pollution. Link the two, increase energy taxes on fossil fuels while also lowering payroll taxes, and you can curb dependence on foreign oil, fight global warming, and boost employment and take-home pay.
The basic idea isn't new. Jimmy Carter briefly backed the idea of taxing employment less and energy consumption more in 1977. So did Rep. John Anderson as a 1980 independent presidential candidate. Gore first embraced it in 1992. But it's especially resonant today.
Call it the "lean and green" solution - lean because lowering payroll taxes lowers labor costs, making American workers more competitive in the global economy, and green because higher energy taxes lower pollution and "greenhouse gas" emissions contributing to climate change.
As New York Times columnist Thomas Friedman wrote this year, "The Energy Question is the big strategic issue of our time, overtaking 9/11 and the war on terrorism," because U.S. demand for foreign oil is lining the pockets of Iran and other potentially hostile governments. He advocates a dramatically higher gasoline levy (a "Patriot Tax") with some of the proceeds rebated to consumers through lower payroll taxes.
Conservatives see this as a tax-and-spend liberal, wealth-redistributing, vast, anti-business left-wing conspiracy, right? Wrong.
Syndicated columnist Charles Krauthammer proposed hiking gasoline taxes to keep prices high and windfalls out of foreign hands, to encourage smaller cars, and to create federal revenue that would "immediately be cycled back" into lower payroll or income taxes. Irwin Stelzer of the conservative Hudson Institute, proposed taxes on pollution and imported oil as an alternative to the "job-destroying payroll tax." Texas oilman T. Boone Pickens, who believes global oil production is near peak, advocates raising gasoline taxes to keep pump prices around $5 a gallon, encourage conservation, and create revenues enabling payroll-tax cuts. Acknowledging 80-plus evangelical leaders' calling for action on global warming this year, William F. Buckley proposed "a surtax on gasoline."
You don't have to worry about global warming or U.S. dependence on foreign oil to support taxing energy or other natural resource to reduce payroll taxes. You just have to like jobs.
To prevent outsourcing jobs to foreign workers or relocating manufacturing facilities overseas, we must reduce our biggest non-wage labor cost: payroll taxes. Social Security and Medicare payroll taxes alone are 15.3 percent of most salaries for both employers and employees. Cut them 10 percentage points, estimates University of Texas labor economist Daniel Hamermesh, and employment would grow 3 percent in the near term and up to 10 percent longer term. That's millions of jobs.
This is why other nations are already getting "leaner" (if not necessarily "greener"). Russia recently raised oil levies and slashed its payroll tax by 10 percentage points. Italy is preparing to cut its payroll tax 5 points; Germany by 2. France will eliminate payroll taxes on low-income workers at companies with fewer than 20 employees. Sweden's newly elected government made similar proposals. More than a dozen European nations have cut, or are poised to cut, payroll taxes to boost job creation.
But whether you care about Europe's example or not, whether you're motivated by fighting global warming or fighting foreign-oil dependence, Americans of diverse viewpoints can agree on this: It's time we created more jobs by shifting taxes off employment and onto consumption of energy and other natural resources.
Robert Walker is the president of Get America Working! www.getamericaworking.org, a bipartisan full employment policy group.