[Congressional Record Volume 141, Number 141 (Tuesday, September 12, 1995)]
[Extensions of Remarks]
[Pages E1759-E1760]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         THE GREEN REVENUE PATH

                                 ______


                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Tuesday, September 12, 1995
  Mr. STARK. Mr. Speaker, as we consider changes to the Tax Code, I 
hope that we can consider bills to discourage pollution and the 
depletion of scarce natural resources.
  I've long proposed these kinds of tax changes, and I am today 
introducing the first in a series of such tax bills--a bill which will 
eliminate various subsidies designed to encourage the consumption of 
polluting materials and the destruction of scarce natural resources.
  I would like to enter in the Record at this point an excellent op ed 
on this subject which appeared in the September 10 Washington Post 
entitled, ``The Green Revenue Path.'' Over the coming months, I plan to 
introduce other bills to advance the ideas contained in this article.
   The Green Revenue Path--For Healthy Growth, Washington Should Tax 
                          Resources, Not Labor

                  (By Ted Halstead and Jonathan Rowe)

       For all the talk of radical tax reform in Washington, 
     there's a basic question that the politicians and experts 
     have somehow missed. The leading proposals, whether 
     Democratic or Republican, are justified by what they wouldn't 
     tax--capital gains, interest income, etc.--not by what they 
     would tax. Purporting to encourage savings and investment, 
     these proposals would all tend to shift the burden of 
     taxation in one way or another from income onto work--that 
     is, onto the folks who, in Sen. Phil Gramm's apt phrase, 
     ``pull the wagon.''
       There's a better way, one that doesn't penalize the 
     things--work and enterprise--that America needs most. Instead 
     of taxing the creation of wealth, the government ought to 

[[Page E 1760]]
     tax the depletion of it. The federal government should be moving toward 
     elimination of payroll and income taxes and toward taxation 
     of the use of finite natural resources and the pollution that 
     results. Instead of using taxes simply to raise revenues, the 
     government could raise revenue in a way that helps reduce the 
     need for both government and taxes.
       This idea of resource-based taxation is quite different 
     from President Clinton's BTU tax proposal in 1993 that was 
     mainly a new tax on top of the existing income tax structure. 
     By contrast, we're talking about replacing the income and 
     payroll taxes on the middle class with taxes on the use of 
     finite resources such as oil and coal, on pollution and on 
     virgin materials that end up in the trash. The federal income 
     tax would be restored to what it was in the early 20th 
     century--a kind of excise tax on only the very richest 
     Americans (a historical fact that the Democratic party seems 
     to have collectively forgotten).
       Such a tax shift would provide a big boost for jobs and for 
     America's ability to compete in the world.
       First, eliminating income or payroll taxes for most of the 
     middle class would cut the cost of labor in America without 
     reducing wages. The real ``job killer'' of the current tax 
     system is not the tax on capital gains, as Republicans claim. 
     Much more debilitating for employment in America is the 
     payroll tax, which slaps a big penalty on small businesses 
     for the heinous act of hiring a worker. Resource-based taxes 
     provide a practical way to reduce that penalty.
       Second, a shift to resource taxes would push our whole 
     economy toward more efficiency. A few pioneering companies 
     have already shown the economic gains that are waiting to be 
     tapped, as Joseph J. Romm demonstrates in his book ``Lean and 
     Clean Management.'' Boeing, for example, installed efficient 
     new lighting that has cut electricity use for that purpose by 
     90 percent. West Bend Mutual Insurance, in West Bend, Wis., 
     cut total energy use almost in half with a new office 
     building designed to conserve resources.
       Since conservation technologies and practices employ many 
     more people than does the use of virgin resources, more jobs 
     would result. Many of those new jobs would be in recycling, 
     which would boom because virgin materials would no longer 
     have the subsidies they enjoy under current tax laws. This, 
     in turn, could help bring manufacturing jobs back to the 
     inner cities, which could become the new supply depot of 
     recycled raw materials, the equivalent of the mouth of the 
     mines, that companies seek to be near.
       Third, resource-based taxes would help solve our 
     environmental problems by reducing the need for cumbersome, 
     top-down regulation. Boeing's manager of conservation, 
     Lawrence Friedman, has noted that if every company in America 
     adopted the lighting efficiencies that Boeing did, ``it would 
     reduce air pollution as much as if one-third of the cars on 
     the road today never left the garage.'' In other words, a 
     resource tax system would make tax avoidance both legal and 
     socially desirable. As individuals and corporations sought to 
     cut their tax bills, the environment would become cleaner and 
     the economy more efficient--and regulators less necessary.
       This is not a pipe dream. We have
        completed the first draft of a resource tax proposal for 
     the state of California, and found that the state could 
     abolish virtually all existing state and local taxes, and 
     raise the same amount of revenue from resource use and 
     pollution instead. A shift of that scale is not feasible 
     at the federal level. However, a reasonable tax on 
     resource use and pollution--which would keep the price of 
     gasoline within the levels paid by Europeans and 
     Japanese--would make it possible to eliminate the federal 
     income tax entirely for families making up to $75,000 a 
     year, and for individuals earning up to $40,000. Part or 
     all of that money could be used to abolish payroll taxes 
     at the lower wage levels, and to buffer low-income 
     Americans from the impact of the tax.
       So why not? Some will warn that the United States would 
     lose competitive position, but the opposite is more likely. 
     With incentives to become lean and efficient in the use of 
     resources, American companies would actually gain a 
     competitive edge. Convinced of this, major international 
     corporations in Sweden, such, including IKEA and Electrolux, 
     are supporting a move toward resource taxes there, and the 
     European Community is moving in this direction as well. 
     Moreover, Prof. Lawrence Goulder of Stanford has shown how a 
     resource tax could be levied on the energy content of key 
     imports, keeping the playing field level for American 
     producers paying such taxes.
       Another objection will be raised by technological utopians, 
     who say there's no such thing as ``finite'' natural 
     resources, because the infinite ingenuity of people will 
     always find substitutes for any resources that run out. If 
     that's true, then resource-based taxation would buy more time 
     for such new technologies to arise; it would also create 
     price incentives that would hasten the development process. 
     This would help bring about exactly what Newt Gingrich says 
     he wants: a Third Wave economy, which Alvin Toffler describes 
     as based on ``processes and products that are miserly in 
     their energy requirements.''
       Resource-base taxation is a proposal designed for where the 
     economy is going, rather than where it has been.
     

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