Tax energy use instead of homeowners
America can solve three major problems with one measure: Reducing property taxation on the local level and instead taxing energy consumption.
Compared to other countries like Germany, real estate property in the US is much more heavily taxed. Still, in poorer neighbourhoods, where a relatively large part of the pupils grow up, local taxes are insufficient to provide for adequate schools, as the value of property and thus the tax base is lower there.
In the US, energy is taxed much less than in other industrial states, with the consequence of high carbon emissions and more waste of energy. This waste of energy is now impacting the competitiveness of American economy, since energy prices have increased tremendously.
The simplest measure would be a flat and uniform tax rate on all primary energy consumption, except for renewables. Alternatively, a carbon tax could be introduced, though a rate based on primary energy would lead to less changes in energy markets and avoid windfall profits for nuclear power.
The income at the federal level shall be redistributed to the local level. For this redistribution, the number of school-age kids shall be a major criteria. Other population groups with special impact on public expenditures like infants or very old people also can be part of the formulae. Local tax districts shall be obliged to refund much of the income by reductions of property tax rates. Only in poorer neighbourhoods, with little property tax to reduce, an increase of expenditure for schools shall be part of the game.
The large tax relief for homeowners would have the consequence that house prices would fall less.
The second result would be more huge investments in energy saving measures, with particular impact in the building industry. As a result, expenses for energy and also oil imports from the Middle east would be reduced - not to speak of the climate change issue.
The third result would be a better education of pupils with parents that can only afford to live in poor neighbourhoods, which would improve human resources in the long run.
Congress should act now, so that property taxes are reduced from 2009 onwards, and shall not wait for presidential elections.
Compared to other countries like Germany, real estate property in the US is much more heavily taxed. Still, in poorer neighbourhoods, where a relatively large part of the pupils grow up, local taxes are insufficient to provide for adequate schools, as the value of property and thus the tax base is lower there.
In the US, energy is taxed much less than in other industrial states, with the consequence of high carbon emissions and more waste of energy. This waste of energy is now impacting the competitiveness of American economy, since energy prices have increased tremendously.
The simplest measure would be a flat and uniform tax rate on all primary energy consumption, except for renewables. Alternatively, a carbon tax could be introduced, though a rate based on primary energy would lead to less changes in energy markets and avoid windfall profits for nuclear power.
The income at the federal level shall be redistributed to the local level. For this redistribution, the number of school-age kids shall be a major criteria. Other population groups with special impact on public expenditures like infants or very old people also can be part of the formulae. Local tax districts shall be obliged to refund much of the income by reductions of property tax rates. Only in poorer neighbourhoods, with little property tax to reduce, an increase of expenditure for schools shall be part of the game.
The large tax relief for homeowners would have the consequence that house prices would fall less.
The second result would be more huge investments in energy saving measures, with particular impact in the building industry. As a result, expenses for energy and also oil imports from the Middle east would be reduced - not to speak of the climate change issue.
The third result would be a better education of pupils with parents that can only afford to live in poor neighbourhoods, which would improve human resources in the long run.
Congress should act now, so that property taxes are reduced from 2009 onwards, and shall not wait for presidential elections.
Comments
Tax reform is not going to fix anything. Period. In poor areas, there isn't enough money to go around for anything, be it schools or for road repair (see Flint, MI).
From the gist of your post it appears that you (or whoever you cut & pasted this information from) is in favor of taxing rich, wealthy corporations and then handing out the money to all of the poor school districts in the country. Great. This will then be used as another justification for the wholesale offshoring of (what's left of) our industrial base which used to be the engine of our economy.
And this would have no effect on housing prices either.
Good try though, "NEXT!"
Households make up for much of the energy consumption, if you include their cars, their electricity consumption. Add energy consumption for services and supplies that are linked to the whereabouts of the households.
Wealthier people usually have more valuable houses and use more energy - for larger first and second homes, larger cars, more trips etc. So much of the tax reform will only move the tax burden within the wealthier part of the society - from their estates to their consumption. Only a relatively small amount of the shift in tax burden will lead to a net relief for the poorer areas. Only this net redistribution will to some part be able to affect the school system.
Commerce and industry will be relieved from property taxes and pay more for energy taxes. So why should it move abroad, when the total tax paid is about the same? In the long run, if energy saving investments have been made, business will even be more competitive!
The only exception is energy-intensive industry. This right now benefiting from the situation that energy is taxed lower and/or that no carbon limits exist, such as these exist in other countries. But in years to come, the US will also limit carbon emissions. Then it will not be beneficial to have too much energy-intensive industry: If more players are competing for the same carbon emissions, that would bring more constaints for carbon emissions on the remaining economy. It is better to use the carbon credits for business that create more jobs than for just a few high-carbon industries. Job-creation need space and construction of space for jobs will benefit from the Tax reform I have (not copied but for myself) proposed.
But I show and view a lot of houses all over the Seattle area, and there are neighborhoods, where folks are lower middle class, and have older, inefficient homes. these are not the very poorest of the neighborhoods, but have older folks who aren't rich and don't have money to install new energy efficient furnaces and new windows, etc...but the people living in Wallingford who have more means will be the likely beneficiaries of something like this, the folks who have an interest and knowledge in energy efficiency, and the money to do something about it.
Older Lower middle class folks in Kent and Burien, living in these inefficient 50's homes?
Let 'em turn down their heat and wear a sweater?
Not true. Now, I couldn't follow the original post, because it was disjointed, but taxes in general reduce demand and subsidies increase demand. Why do you think demand for oil is rising so quickly in Iran?
However, tax reform can never eliminate anything. If we have 10% too much CO2, taxing gasoline and coal plants could solve the problem. If we have 100% too much CO2 (recent studies suggest all CO2 production must cease), then taxes won't 'fix' the problem. They still might lessen the problem though.
Further, when taxes are applied to problems (pollution) it tends to spur innovative technology, which may in the future eliminate the problem.
BTW, British Columbia announced last week that they are going to implement a Carbon Tax. Timeline is slated for the end of the year.
Utimately, the only thing that MIGHT delay the onset of the CO2 tipping point and lessen it's impact, is a Tax. Not only that, there would need to be price controls, and nationalization of power production (think City Light), to a non-profit model if private utilities balk. Degregulation of the utilities industry in this country was a huge mistake, and is also partly responisible for Enron. We should consider ourselves lucky we are not PA.
We have delayed this for so long, there are not many choices left. Not only that, we need to bring China in line with this. A tall order for the next Federal Administration.
And India...and Russia/Brazil would be good too.
I think China would already be moving to solve some of their problems if we were less hypocritical about CO2. China has a lot of other pollution problems as well, but they can always point out how much CO2 the US unleashes to justify their own pollution.
The real problem with pollution by the way is not the harm it does, but that it does that harm 'for free'. If the cost of cleanup were tacked onto the polluting party, rather than being covered by society in general, we wouldn't really have much of an issue. Which is of course the reason pollution taxes work. They simply transfer the cost (or some of it at least) to where it belongs.
Nothing like replacing a tax that tracks linearly with income (wealth) with a tax that's basically flat. We might as well jack up the FICA tax, charge 20% sales tax, flatten the income tax brackets, and while we're at it we can get rid of that silly tax on investments and estates.
Any other ways of sticking it to the bottom 90% of Americans? I think I got most of them.