Wednesday, May 12, 2010

The Road less traveled!

I would advise my Readers to study this Piece, which might introduce some rationality to environmental policy. I do not like Renewable Portfolio Standards on the surface, because it allows Pollution without interaction with market forces; this means that automatic dirty industrial processes must pay for the program, with marginal production getting a relative skate to pollute. My ideas would basically turn the EPA into an arm of the IRS, charging reasonable charge on all Polluters; possibly a regressive form of Tax, where initial charge to Pollute is very high, and reduces at progressive reduction with emission levels. State authority must be constrained in some manner to achieve uniform national standards, but this could be accomplished by granting them the status of Corporations under environmental law, and charging a carbon tax rate similar to the one proposed above. I am sure State legislators will desire to bring environmental standards in line with national standards, if they perforce must advance revenues to a national agency. The issue of Drilling should also be rationalized, whereby Drillers are taxed per hours of Drilling, but also with an applied emissions tax; the same could be applied to Energy Transportation and Refining capacity.

Felix Salmon attempts to explain the European position on debt. One of the great problems of Government debt today consists of is the common animus towards raising taxes of any kind. Anyone could tell the Reader that the debt picture of Government everywhere would be vastly altered, if real taxation were increased 5% overall in real terms. Creditors find it disturbing that Debtors will make no attempt in real terms to reduce their own debt. The tax increase of which I speak would probably reduce around Three-Quarters of all Government debt within 11 years, if such real taxation were applied. Real Wages would probably make up 90% of such tax increase within 3 years of tax introduction, and Business profits would absorb the greatest impact; yet We are only talking about perhaps 3% of total Profits. The cheapest Solution could be simply raising taxes, though this would adversely affect Investment opportunities; thus making Money much cheaper to acquire.

It is now time to explain the two solutions proposed here, and their possible impact. Real Tax revenues would probably rise over 30%, but with an inflationary pressure increase of less than 2% of current pressure readings. Creditor Profits would narrow, with Depositors demanding a normal increase for invested funds, in order to supply the increased taxation; while the reduction of debt levels would reduce Investment opportunity, so that there would be probably a 3% reduction in Lending rates. Government expenditures would have to be held constant, or the increased taxation will be useless to improve the debt posture of nations. Holding the Line, though, could improve the Living Standards of all citizens, as Investment Cash moved to actual capital construction where Labor rolls would increase, and outsize Suppliers would have to limit their excesses in order to maintain their Clientele. I await the charge of the Lobbyists attempting to deny this thesis. lgl

No comments: