"The Get America Working! approach would work, in effect, by correcting a major price distortion. The current U.S. Internal Revenue Code taxes employment far more heavily than it does the use of natural resources. This distortion has grown progressively worse as payroll taxes have grown. Revising this distortion would increase employment, equity and overall economic vigor importantly. And it would do so by responding to market price signals, not through clumsy and expensive government interventions."
"Show Us the Ball" - A Simpler Approach to American Renewal
Date:
Wed, 04/08/2009
Source:
New York Times
In this column Thomas Friedman argues that America needs to "put a price" on carbon not just to address climate change, but to "stimulate massive innovation in the next great global industry — E.T. — energy technology." He argues the current "cap-and-trade" proposals being discussed "hide the ball" -- they hide the fact that there will be a price that is essentially a tax. He finds merit in the proposal of Rep. John Larson (D-CT) [see article below] to put a clear tax on carbon, but he notes, "Larson would use most of the income to reduce people’s payroll taxes: We tax your carbon sins and un-tax your payroll wins." Friedman adds that this type of tax change,"...could be the foundation for a second American industrial revolution, plus it would tip the whole planet onto a greener path. So American economic renewal is the goal, but mitigating climate change would be the great byproduct."
