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VT Green Tax Shift

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VT Green Tax Shift & Common Asset Fund Dec. 7, 2004 UVM Green Tax course Public Administration 395: Melissa Bailey Thomas A. Benoit Sr. Amanda Dow Davis – PowerPoint PPT presentation

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Title: VT Green Tax Shift


1
VT Green Tax Shift Common Asset Fund Dec.
7, 2004 UVM Green Tax course Public
Administration 395 Melissa Bailey Thomas A.
Benoit Sr. Amanda Dow Davis John Demeter Cheryl
L. Diersch Gary Flomenhoft, Instructor Peter M.
Freeman Andrew Jope John Mejia Rachel Marie
Weston
http//www.uvm.edu/gflomenh/GRN-TAX-VT-PA395/
2
There is nothing more difficult to carry out,
more doubtful of success, nor more dangerous to
handle, than to initiate a new order of things.
For those who would institute change have enemies
in all those who profit by the old order, and
they have only lukewarm defenders in all those
who would profit by the new order. ---Nic
olo Machiavelli, 1490
3
WHAT ARE GREEN TAXES?
  • "PAY FOR WHAT YOU TAKE, NOT FOR WHAT YOU MAKE"
  • "TAX WASTE, NOT WORK
  • Tax Nature, NOT Labor or Capital
  • Environmental protection
  • Economic Efficiency
  • Using market incentives

4
Survey-EU Green taxes
5
EU Types of Green taxes
6
NW GREEN TAX SHIFT
7
Inventory of NE GREEN TAXES
8
NE GREEN TAXES
9
NE GREEN TAXES
10
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11
CURRENT VERMONT GREEN TAXES
12
GREEN TAX PRINCIPLES
What is the goal of government? What is the goal
of taxation? Can they be combined?
13
Non-Excludable
Excludable
Open Access Regime (misnamed Tragedy of the
commons) Oceanic fisheries, timberetc. from
unprotected forests, air pollution, waste
absorption capacity
Market Good Food, clothes, cars, land, timber,
fish once captured, farmed fish, regulated
pollution
Rival
Potential market good (Tragedy of the
non-commons)but inefficient patented
information, Pond, roads (congestible), streetligh
ts
Pure Public Goodclimate stability, ozone layer,
clean air/water/land, Biodiversity, information,
habitat, life support functions, etc.
Non-rival
Private beaches, private gardens, toll roads,
zoos, movies
Non-rival, congestible
Public beaches, gardens, roads, etc.
14
Taxation Provision of Public Goods

Taxation
Public Goods
Green Taxes
15
GREEN TAX PRINCIPLES
  1. Internalize external costs
  2. Behavioral Approach
  3. Revenue Generating

16
EXTERNAL COSTS?
ECONOMY
POLLUTION
DEPLETION
LAND USE
(Not to mention social costs)
17
PRICES LIE
18
Vermont GPI study
19
GDP AND HAPPINESS
20
1. Cost Internalization
  • Pigouvian theory (AC Pigou)
  • external costs
  • Polluter pays principle
  • restoration costs
  • Least cost abatement-
  • cost required to abate pollution

21
(No Transcript)
22
2. Behavioral Approach
WHATEVER YOU TAX YOU GET LESS OF (WITH ONE
EXCEPTION) WHAT DO WE WANT LESS OF? WHAT DO WE
WANT MORE OF?
23
TAX ON BUILDINGS/JOBS
P
S1
CS
p1
PS
D
q1
Q
24
TAX ON BUILDINGS/JOBS
S2
P
tax
S1
CS
p2
Deadweight loss
p1
PS
tax
D
q1
q2
Q
25
Inelastic demand-gasoline (few subs.)
P
S1
CS
p1
PS
D
q1
Q
26
Inelastic demand-gasoline
S2
P
S1
S1
CS
p2
PS
p1
tax
tax
D
q1
q2
Q
27
Elastic demand-movie (many subs.)
P
S1
S1
CS
p1
PS
D
q1
Q
28
Elastic demand-movie
S2
P
S1
S1
CS
p2
p1
PS
D
tax
q1
q2
Q
29
TAX ON LAND - no production cost
S
Buy land, they aint making any more.
-Will Rogers
P
P1
D
Q
Q1
30
TAX ON LAND - fixed amount
S
Buy land, they aint making any more.
-Will Rogers
P
P
tax?
P1
D
Q
Q1
31
TAX ON LAND - no reduction
S
Buy land, they aint making any more.
-Will Rogers
P
P
tax?
P1
tax
Ps
D
Q
Q
Q1
32
Modern Economists
Right Land tax is the least bad tax
---Milton Friedman Green Taxation of
value added by labor and capital is certainly
legitimate. But it is both more legitimate and
less necessary after we have, as much as
possible, captured natural resource rents for
public revenue. ---Herman Daly Left
Usurious rent is the cause of worldwide
poverty ---Joseph Stiglitz
33
3. Revenue Generating
Green tax increase How to spend the money?
Deficit reduction none in VT
Dedicated revenues 5 Million
Other tax relief 500 Million
34
GREEN TAX CRITERIA
  1. ECONOMIC EFFICIENCY
  2. DISTRIBUTIVE EQUITY
  3. ENVIRONMENTAL PROTECTION
  4. EASE OF ADMINISTRATION

35
Vermont Budget for 2004John Demeter
  • 3,574,308,641
  • or about
  • 3.574 Billion

36
Sources of Revenue
  • Federal Funds 1.083 B
  • Tax Dept Revenue 1.063 B
  • Property Value Taxes 741.6 M
  • Other Fees/Taxes 677 M

37
What does Other include?
  • Motor Vehicle Fees
  • Certain Gas and Fuel Taxes
  • Licensing and Permitting Fees by ANR, Sec. State,
    judiciary, and others

38
Complexity
  • Tax Department 37 line items in Revenue account
    reports, each with own set of rules and regs, not
    including property value tax.
  • Fees Hundreds, if not thousands, administered
    and collected by various agencies. No
    compilation list exists. 1/3 of updated fees are
    reviewed annually by the JFO.

39
Complexity, continued
  • Few reliable sources of information exist.
  • Must master the Bureaucratic shuffle to begin to
    assemble worthwhile info.

40
A. 2.117 B dollars instate revenue
Goal of revenue analysis
Q. How much revenue raised in VT?
  • Starting point for green tax shift.

41
2004 Vermont Revenue
42
2004 Vermont Revenue
43
2004 Vermont Green Revenue
44
Energy TaxesAndrew JopeRachel WestonPeter
Freeman
45
The Case for a VT Carbon Tax
46
Rationale
  • Simplification
  • Replace existing energy taxes with a single tax
    on carbon content of fuels.
  • Behavioral Change
  • Encourage reduced consumption of fossil fuels and
    reduced CO2 emissions.
  • Revenue Leveraging
  • Make use of revenues to purchase energy saving
    efficiencies and stimulate growth.

47
Current Energy Taxes
Rate 04 Revenue
Gasoline Tax .19 / gal 71.9
Diesel Tax .16 / gal 18
Sales Tax on Comm. Energy 5 (with exceptions) 15
Utilities Gross Receipts .3-.5 of gross oper. revenue 5.7
Fuel Gross Receipts .5 on retail sales 5.5
TOTAL 116.1
48
Carbon Tax Pro/Con
  • PRO
  • Broad influence- consumers, transport.
  • Low transaction costs
  • Ease of administration
  • Produces recyclable revenue
  • CON
  • Emissions reductions not predictable
  • Vulnerable pricing due to inflation/ price shocks
  • Not targeted to reduce all GHGs.
  • Regressive

49
Carbon Tax Proposal
  • 100 per ton tax on carbon content of fuels.
  • Applied at point where fuels enter Vermont
    economy.
  • Revenues recycled back to taxpayers (individual
    and commercial).
  • Comparable tax on nuclear and large hydro (market
    competitiveness).

50
Revenue Estimates
100/ton tax on hydro/nukes Minus existing energy taxes
Total 364,500,000 248,400,000
Residential 112,400,000 76,600,000
Commercial 71,500,000 48,800,000
Industrial 53,000,000 36,100,000
Transportation 127,500,000 86,900,000
51
Price Effects on Fuels
2004 Estimate
Gasoline ( per gallon) .29 - .19 .10 net increase
Electricity (cents / kWh) .01 (less existing)
Natural gas (cents/ therm) 17.2 (less existing)
Fuel Oil ( per gallon) .34 (less existing)
Coal ( per ton) 76 (less existing)
52
Energy Savings and CO2 Reductions
Energy Use (TBTU) 125.56
Energy Saved (TBTU) 4.98
GHG Emissions (CO2 equiv. tons) 9,702,000
GHG Emissions Reduced (CO2 equiv. tons) 386,000
53
2004 Energy Tax Revenues (Existing)
  • 2004 Total energy revenue  259,269,147

54
Energy Tax Revenues (Including Carbon Tax)
  • 2004 Revised Energy Revenue 521,540,000

55
Energy Tax Revenues (Including Carbon Tax)
56
Trading Carbon Offsets
  • Emerging markets for emissions/ sequestration
    trading
  • Kyoto Signatory nations
  • EU cap and trade system (2005)
  • Chicago Climate Exchange
  • Northeastern States cap and trade system (2005)
  • Allows for trading CO2 emissions with carbon
    sequestering sinks.
  • the biggest commodities market in the world.
    -R. Sandor (Northwestern Univ. / CCX)

57
Carbon Trading Potential for VT
Agricultural/Forest Land
  • States (NE,AK) have begun quantifying
    sequestration potential of land.
  • VT forests hold a carbon stock of 492.6 MMTC
    (1997).
  • Carbon tax revenues can be used to quantify
    capacity/pool land holdings/define compliance
    mechanisms for trading.
  • US farmers can sequester 200 MMTC annually / add
    4-6 billion gross income (10 increase in
    average net farm income).

58
Shifting Transportation
  • With a rise in the price motor fuel, drivers may
    seek other options.

59
High Speed Rail
  • Vermont has been designated a HSR corridor as
    part of the Boston-Montreal Corridor.
  • Infrastructure in place

60
Funding for HSR
  • Estimated cost 300 million in capital
    investments.
  • Decrease new road and highway construction and
    re-allocate for HSR

61
Alternative Fuel Vehicles (AFVs)
  • To make Vermont a leader in clean fuel vehicles,
    need
  • Initiative
  • Money
  • Effective approach

62
Initiative
  • Vermont has not been subjected to federal
    regulations due to its small size and clean air
  • But has taken voluntary measures
  • Clean cities coalition (VCCC)
  • However, more must be done

63
Money
  • VCCC has been severely under funded
  • 40,000 operating budget in 2004
  • With no money, program is largely symbolic
  • Large funding increases necessary to achieve
    programs goals
  • Carbon Tax to the rescue

64
Effective Approach
  • Automobile consumer market stubborn
  • Gas prices not enough to induce change
  • AFVs must be viewed as desirable product
  • Since market for AFVs is currently weak, must get
    vehicles on the road through other means
  • Fleet Conversions

65
Fleet Conversions
  • Municipal and Private
  • Target niche markets for cost effectiveness
  • Affects most polluting vehicles
  • Minimizes cost of, and maximizes use of new
    infrastructure development
  • Maximizes technological upgrading
  • Many markets in Vermont, especially Burlington

66
Niche Markets in Burlington
  1. Public busses
  2. Vehicle lease programs for commuters
  3. University of Vermont Campus
  4. Taxi services
  5. Burlington International Airport

67
Vermont Property Related TaxesMelissa Bailey
68
Vermont Property Taxes
Tax Rate 2004 Revenue
Property Transfer Tax .5- 1.25 33,951,657
Speculative Gains Tax 5-80 4,288,132
Current Use Penalty Tax 10-20 404,155
Property Tax (State Portion) avg 1.52 741,600,000
69
Vermont Property Taxes
70
Property Taxes
  • Are actually 2 taxes on land and on
    improvements.
  • Provide a steady and reliable source of income.
  • Account for 1/3 of VTs state revenue.
  • Can influence development patterns.

71
Land Value Taxation
  • Shifts property tax liability from improvements
    to land.
  • Articulated by political economist Henry George
    (1879).
  • Equity, Efficiency, Environmental Protection.

72
Effects of Land Value Taxation
  • Removes market disincentive for making
    improvements.
  • Reduces land speculation.
  • Reduces sprawl, encourages compact development.
  • Society benefits from societal value of land.

73
Applications of Land Value Taxation
  • 700 cities worldwide use a graded property tax
    system
  • Denmark (1844)
  • Canada (1903)
  • South Africa (1914)
  • Pennsylvania (1913)

74
Land Value Taxation in Vermont?
  • Currently 2/3 of VT Property Tax Revenue comes
    from tax on the value of buildings.
  • Buildings assessed at 33.2 Billion and Land
    assessed at 14.9 Billion.
  • LVT rate of 5 would generate the current level
    of revenue for the state.

75
Recommendations
  • Apply LVT only in growth centers.
  • Reverse current ratio to generate 2/3 of state
    property tax revenue from taxes on land.
  • Work with established growth boundaries being
    developed by the Vermont Smart Growth
    Collaborative.
  • Revenue Neutral.

76
Proposed Property Tax Revenue
77
WASTE TAXES-Thomas A. Benoit Sr.
Past Taxes and Projected Changes
78
  • Solid Waste
  • Operators of Solid Waste facilities and
    Transfer facilities pay a 6 per ton tipping fee.
  • Vermonters generate approximately 3.4 pounds
    per capita every day
  • Most Vermonters pay for waste disposal on a
    per capita or flat fee rate.
  • Vermont has two permitted lined landfills that
    will reach capacity in about seven years.
  • Vermont has a .05 deposit on glass, metal,
    paper or plastic containers of beer, malt
    beverages, mineral waters, mixed wine drinks,
    soda water, and carbonated soft drinks.

79
  • Hazardous Waste
  • A fee of one cent per gallon is assessed on all
    motor vehicle fuels sold in the state for the
    purpose of providing cleanup funds for leaking
    petroleum storage tanks.
  • A tax is assessed on hazardous waste in Vermont
    when the waste is shipped, or when facilities
    recycle, treat, store, or dispose of hazardous
    waste. The tax is based on the quantity of the
    hazardous waste and its ultimate destination
    (e.g., whether it is destined for recycling,
    treatment, or land-disposal.
  • The standard fee for Underground storage tanks
    (USTs)is 200 per tank, but some gasoline outlets
    and municipalities that use smaller amounts of
    motor vehicle fuel pay 100 per tank.
  • Petroleum cleanup fees and tank assessment fees
    are deposited into the Petroleum Cleanup Fund.

80
2004 Current Revenue for Total Waste 5,901,672
81
  • GREEN TAX RECOMMENDATIONS
  • Solid Waste
  • Increase the solid waste tax from 6 per ton to
    12 per ton (3,243,041 to 5,188,866 assuming a
    20 reduction in waste due to the increase).
  • Institute a mandatory recycling and enforcement
    program.
  • Institute statewide mandatory Pay As You Throw
    (PAYT) programs with a .13/pound PAYT fee (approx
    260/ton or 144,135,156).
  • Increase funding for market development for
    recycled materials.
  • Bottle Bill
  • Keep the bottle deposit at 5 cents and add all
    beverage containers to the bottle bill.

82
  • GREEN TAX RECOMMENDATIONS
  • Hazardous Waste
  • Increase the petroleum clean-up fee from one
    cent per gallon to two cents per gallon
    (2,385,227 to 4,774,454).
  • Increase compliance and inspection visits for
    tank owner (300,000).
  • Increase education and outreach to tank owners
    and the general public (200,000).

83
2004 Revised Revenue for Total Waste
155,005,344
84
(No Transcript)
85
  • INTENDED OUTCOMES
  • Solid Waste
  • Decrease our current rates of fill for the two
    permitted lined landfills.
  • Mandatory recycling and enforcement will level
    the playing field for all those involved.
    Recycling will take place at all levels
    (residential, business and institution).
  • PAYT will create personnel incentives to reduce
    waste generation and increase recycling.
  • Markets development will make waste reduction
    a very appealing option.
  • Bottle Bill
  • Increase recycling and generate more materials
    for the recycling markets.

86
  • INTENDED OUTCOMES
  • Hazardous Waste
  • Regulated tanks will be operated and maintained
    properly due to increased inspections, which will
    result in fewer leaking tanks.
  • Current sites will have more resources to help
    eliminate environmental pollution.
  • Tank owners and the general public will be more
    aware of improper maintenance and contamination.

87
Pesticides, Fertilizers, Air Water Pollution
John Mejia Amanda D. Davis Cheryl Diersch
  • Health
  • Our Most Important Asset

88
Pesticides, Fertilizers, Air Water Pollution
Man can live about forty days without food, about
three days without water, about eight minutes
without air, but only for one second without
hope. Anonymous
When the wells dry, we know the worth of
water. Ben Franklin
Treat the earth well, It was not given to you by
your parents, It was loaned to you by your
children. Native American Proverb
  • Health
  • Our Most Important Asset

89
The Problem
  • Discharges into Lakes, Rivers, etc.
  • Harmful Air Emissions
  • Consumption of Hazardous Household Products
  • Family Farms Struggling Due to High Costs of
    Pesticides and Fertilizers

90
Where will VT be in 20 years if we ignore the
problem?
  • California Model
  • DETERIORATED HEALTH AND ENVIRONMENT
  • Increased Cancer Rates
  • Increased Infant Mortality
  • Toxic Water
  • SMOG
  • Loss of Family Farms

91
Where could VT be in 20 years if we address the
problem?
  • Slovenia Model
  • HEALTHIER FAMILIES CLEANER ENVIRONMENT
  • Decreased Infant Mortality
  • Movement towards Organic
  • Anti-GMO
  • Population - 2 million
  • Vibrant Tourist Industry
  • Recently Seceded

92
Strategies for Behavioral Change
  • Education Raise Public Awareness
  • Reduce Consumption Price Adjustments
  • Reuse Gray Water Irrigation
  • Innovation Sustainable Eco-Friendly Practices

93
Air Pollution
  • The Problem
  • Most air pollution is from non-point sources.
  • Due to the rural nature of our state, 50 of
    energy expenditures in VT are for transportation
    and this accounts for most of the air pollution
    in the state.
  • This transportation related pollution has been
    dealt with by the Carbon Tax explained earlier.

94
Air Pollution
  • Air Toxics Program
  • Title V

95
Title V - Construction
96
Title V - Operating
Emitters have to pay for permission to release
harmful chemicals into the atmosphere. They pay
fees to the state to cover the cost of monitoring
their businesses and then get charged by the
amount of pollution emitted. Usually by the pound
or gallon of chemical.
97
Air Toxics - Definition
  • "Air toxics" refers to 188 hazardous air
    pollutants (HAPs) listed in the Clean Air Act
    (CAA) of 1990.
  • HAPs include industrial chemicals, solvents,
    metals, pesticides, and combustion by-products.
  • Top 10 air toxics exceed health-based standards
    in Vermont.
  1. Acetaldehyde
  2. Formaldehyde
  3. Benzene
  4. Methylene Chloride
  5. 1,3-Butadiene
  6. Tetrachloroethylene
  7. Carbon Tetrachloride
  8. Mercury
  9. Chloroform
  10. Styrene

98
Air Toxics
  • Mobile Sources On and off road vehicles and
    aircraft.
  • Area Sources Burn barrels, gasoline filling
    stations, woodstoves, paint stripper, surface
    coatings, drycleaners, industrial boilers, etc.
    (small stationary sources)
  • Point Sources Manufacturing operations (large
    stationary sources).

99
Air Toxics Management
Entities producing more than 5 tons of criteria
air pollutants must register with the state.
These include approximately 218 entities
including
  • UVM
  • Cargill
  • OMYA
  • Burlington Electric
  • Middlebury College

These 218 Point Sources released 11,086 tons of
toxics into the air in Vermont during 2000.
100
Air Toxics Revenues
  • In 2003 VT raised 153,576 in revenues from
    toxics.

101
AIR EMISSION FEES
102
Current Water Taxes
  • Water Discharge Fee
  • Application for discharge permit is 100
  • Application review fee ranges from 50 to 30,000
  • Stormwater Fee
  • Administrative fee of 100
  • Application review fee
  • 300 per acre of impervious surface in a Class B
    watershed
  • 1170 per acre of impervious surface in a Class A
    watershed
  • Annual operating fee
  • 50 per acre of impervious surface in a Class B
    watershed
  • 235 per acre of impervious surface in a Class A
    watershed

103
Price Changes
  • Revised
  • Water Discharge Fee
  • 300 permit
  • 150-90,000 review fee
  • Stormwater Fee
  • 300 administrative operating fee
  • 900-3510 application review fee
  • 150-705 annual operating fee
  • Current
  • Water Discharge Fee
  • 100 permit
  • 50-30,000 review fee
  • Stormwater Fee
  • 100 administrative operating fee
  • 300-1170 application review fee
  • 50-235 annual operating fee

104
Water Consumption Fee Part I
  • First 100 gallons of water used per household
    will be free (as it already is), but every gallon
    thereafter will be subject to the 1 cent per
    gallon fee.
  • Currently an average household consumes about
    200 gallons of water per day.

105
Water Consumption Fee Part II
  • Ease of Administration
  • Meters already in place on houses.
  • Meters can easily be placed on wells.
  • Equity
  • Because the first 100 gallons will be free of
    charge, only excessive use of water will be
    taxed.
  • Economy
  • A Water Consumption Tax will generate an enormous
    amount of money which can displace other taxes.
  • Environment
  • Taxation on the consumption of water promotes
    efficiency and conservative use. It also
    encourages recycling, reuse, and innovation.

106
WATER RELATED FEES
107
Pesticide Fertilizer Revenues
Product registration fee Current 75.00 Proposed 300.00
Dealers License Application Fees for Pesticides 41,000 82,000
Fertilizer product registration fees _at_ 15.00/nutrient max. 105.00 _at_ 30.00/nutrient, max. 210.00
Fertilizer tonnage tax_at_ .25/ton with a min. of 50.00 _at_ .50/ton with a min. of 100.00
Total 932,000 3,203,000
108
Sales Tax Exemption for Agriculture
6.0 Sales Tax Exemption for Agricultural Use of
Pesticides and Fertilizers
Current Revenue Fair Tax Proposal Green Tax Proposal
Farmers, Nurseries, Orchards, etc 0.00 1,100,000.00 0.00
109
Total Current -932,000 Proposed - 3,203,000
110
Benefits of Our Proposed Change
  • Healthier Vermonters
  • Pure Water
  • Fresh Air
  • Increased Tourism
  • Family Farms Flourish In Vermont!
  • The GREEN Mountain State Prevails!

111
Resources
  • http//www.chem.unep.ch/pops/POPs_Inc/proceedings/
    abu-dhabi/KOVACS.html
  • http//www.ppionline.org/ppi_ci.cfm?knlgAreaID108
    subsecid900003contentid253035
  • http//cpr.radicaldesigns.org/article.php?id210
  • http//www.anr.state.vt.us/air/Planning/docs/rptFa
    cEmissionsTotal-2000.rtf
  • http//www.vtwaterquality.org
  • http//www.vpirg.org
  • http//www.pesticideinfo.org/Docs/ref_general2.htm
    lChemName
  • http//www.foodfirst.org/who/
  • http//www.serconline.org/pesticides/fact.html
  • http//www.serconline.org/pesticides/index.html
  • http//www.foodfirst.org/pubs/backgrdrs/2004/s04v1
    0n3.html
  • http//www.pesticideinfo.org/Detail_Country.jsp?Co
    untrySwedenChemReg

112
Offsets for a Green Tax ShiftJohn Demeter
113
Additional revenue from Green Taxes 500Million
where should it go?
  • Offset individual income tax?
  • Offset Corporate/business income tax?
  • Offset Telecommunications tax?
  • Other Recommendations?
  • Offset Fed payroll tax?

114
Individual Income Tax?
  • Over 400 M, 40 Tax Dept receipts over last
    several years
  • Can eliminate tax on large percentage of filers
    for relatively small expenditure

115
Individual Income ExamplesTo eliminate income
tax on x , who earnwould cost
  • 52 of filers lt30K Income 19.6 M
  • 71 of filers lt50K Income 72.2 M
  • 100 of filers all income brackets
  • 380M - 420M, depending on year

116
Drawbacks of Income tax Offset
  • State Income tax is progressive enough that
    lowest income filers have little or no liability.
  • Offsetting Income tax would not help compensate
    for higher fuel costs.

117
Corporate/Business Income Tax?
  • Could potentially be eliminated
  • Left alone for now
  • Businesses derive benefits from offsetting FICA
  • Law of unintended consequences
  • Current work being done to change corporate
    taxation, requiring Unitary Combined reporting to
    crack down on income-shifting

118
Sales and Use Tax?
  • Considered green, as it taxes throughput and
    waste.
  • Left alone for now.
  • Must be reviewed and revised to tax
    environmentally damaging products more heavily
    than benign ones.
  • Review exemptions, leave only those on
    necessities used by all people.

119
Federal Payroll Taxes FICA Federal Insurance
Contributions Act
  • Part 1 Social Security/OASDI
  • (Old Age, Survivors, Disability Insurance)
  • 12.4 of all wages paid up to 87,900. Ceiling
    increases to 90,000 in 2005.
  • Half paid by employer, half by employee, unless
    self employed.

120
FICA Taxes, contd
  • Part 2 Medicare
  • 2.9 on all wages no ceiling
  • Half paid by employer, half by employee, unless
    self employed.
  • Total of 15.3 of wages paid to FICA
  • 7.65 each by employer and employee
  • (over 90 of Vermonters are unaffected by ceiling)

121
Why FICA?
  • Better direct offset than income taxes.
  • Easy to measure due to federal reporting
    requirements.
  • Can reimburse based on wages and taxes paid,
    starting at the bottom of the income scale.
  • Better for business 7.5 tax reduction

122
Examples
Income employee VT income tax FICA employee FICA employer Self-employed
10-15K 0 956 956 1912
15-20K 79 1340 1340 2680
25-30 459 2104 2104 4,207
30-35K 633 2486 2486 4972
123
Economic Benefits-FICA offset
  • Returns income to those most likely to spend it,
    boosting local economy.
  • Incentive for employment.
  • Aids businesses as well as workers.
  • If its favorable to employ or be employed here,
    thats a Business-Friendly environment for
    Vermont!

124
Shifts tax from a good to a bad!
  • Revenue collected based on carbon emissions
    and/or water usage, which individuals and
    businesses can work to control. There is a
    financial incentive to make responsible
    decisions.
  • Damaging impacts of payroll taxes are offset,
    boosting Vermont economy.

125
Design/Administration
2.6B revenue
126
Design/Administration
2.6B revenue
127
Design/Administration
2.6B revenue
128
100 Green TAX shift-2004
Carbon 300/ton
Land 9.6
Waste 2/bag
Water 1c/gal gt100gals
Chem product fee 300 on pesticides
2.6B revenue
129
Conclusions
  • Can shift to tax resources and waste without
    hurting and perhaps helping the economy.
  • Can eventually simplify taxation and revenue
    generation enormously by shifting to a few broad
    based green taxes.
  • Like anything else, all thats missing is the
    political will.

130

VT COMMON ASSETS PERMANENT FUND Dec. 7, 2004
G. Flomenhoft, Adjunct Faculty UVM MPA
program Research Associate, Gund Institute
131
COMMON ASSETS-NATURE
132

COMMON ASSETS-SOCIAL
133

ASSAULT ON THE COMMONS
134
Common Assets Permanent Fund
Thomas Paine, Agrarian Justice 1797 Men did
not make the earth...it is the value of the
improvements only, and not the earth itself, that
is individual property...Every proprietor owes to
the community a ground rent for the land which he
holds....from this ground rent...I...propose to
create a national fund, out of which there shall
be paid to every person...a sum.
135

Alaska Model Alaska Permanent Fund
(Share of the commonwealth)
136

Alaska Model Alaska Permanent Fund
137
US Sky-Trust-CAP/TRADE PERMITS
Sky-trust Rent Loop
138
Sky-Trust
139
Sky-Trust
140

VT ASSETS-Natural
141
VT MINERALS-2003
Gemstones 1,000
Sand and gravel, construction 21,200,000
Stone
Crushed 22,800,000
Dimension 29,000,000
Talc, crude Not released
Total 73,000,000
Rent 10 7,300,000
The meek shall inherit the earth, except for the
mineral rights. -J. Paul Getty
142
VT FORESTS
FORESTS (cords-2002) 791,035 x 50/ Cord 39,551,750 x 10 3,955,175
Public Forests (2004) 622,371 x10 62,237
143
VT WATER-2004
WATER 1C/GALgt100 GALS 87,831,410
144
VT LAND-2004
VT LAND VALUE 14,928,311,688
RENT 1 149,283,117
145

VT ASSETS-Social
146
VT Trust-US AIRWAVES
147
VT Trust-US AIRWAVES
148
VT Trust-US AIRWAVES
They used to rob trains in the Old West. Now we
rob spectrum. Senator John McCain, Chairman,
Senate Commerce Committee
149
VT Trust-US AIRWAVES
150

International Exchange
Goods and Services 30 Trillion/yr
Buying and selling of paper 1.5-2 Trillion/day 500-700T/year
95 speculation in paper!
151
VT TRUST-US financial Speculation
Current Trading Projected Tax Rate
Revenue (Annual Rates) Volume AfterTax Volume
(both sides) Stocks 11 trillion 7.3
trillion 0.5 36.5 billion Government Bonds
41.6 trillion 27.7 trillion 0.1 27.7
billion Corporate Bonds 22.1 trillion 14.7
trillion 0.1 14.7 billion Futures Contracts
100 trillion 66.7 trillion 0.02 13.3
billion Currency 200 trillion 133.3 trillion
0.1 33.3 billion (worldwide)
(U.S. share 25) Swaps 22 trillion 14.7
trillion 0.02 2.9 billion Options Not
available NA 0.01 NA Total US
Revenue (.25 RATE) 128.4 billion x
.21 Vermont Revenue 268,891,964
Source Taxing Financial Speculation Shifting
the Tax Burden From Wages to Wagers by Dean
Baker. February 2000. Ctre for Economic
Policy Research
152

WHO CREATES MONEY? (SEIGNORAGE)
GOVT (CURRENCY) 600 BILLION 7
BANKS (LOANS) 8 TRILLION 93
TOTAL 8.6 TRILLION 100
153

FRACTIONAL RESERVE 3-5
How the Federal reserve system creates a private
banking monopoly cartel!
FED RESERVE BANK
PRIVATE BANKING SYSTEM
LOANS 20,000
20,000 ASSETS
1000 (5 OF 20,000 on reserve)
PLUS INTEREST!
INTEREST
1000 DEPOSIT
154

VT MONEY CREATION
VT BANKS (LOANS) 3,574,450,000
1 RATE 35,744,500
155

VT INTERNET ACCESS
Created by Public financing through DARPA. Share
of access, not commerce
WEB SERVERS AND EMAIL ACCOUNTS? ???????????????
156
VT Common Assets Permanent Fund
157
VT Common Assets TOTAL
MINERALS-10 7,300,000
PUBLIC FORESTS 62,237
WATER -1c/gallon) 87,831,410
LAND-1 149,283,117
SPECTRUM-10 161,965,394
SPECULATION-.25 268,891,964
MONEY-1 35,744,500
INTERNET ? ???????????
TOTAL 711,078,622
Interest rate 5? 35,553,931
Dividend 1st yr 57
158
COMMON ASSET DIVIDENDS
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