Many years ago, in a distant place called high school, my history teacher recommended reading US tax law – not to learn about taxes, but as a political document. I didn’t understand what he meant at the time. Now i do.
In general, governments have two distinctly different ways of influencing the behavior of their citizens: directly, by passing laws, or indirectly by providing incentives.
The direct approach involves passing laws that tell people what to do, such as: B. pay federal income tax or serve in the army during the war. The direct approach also includes laws telling people what they are prohibited from doing, such as printing money or selling drugs.
The indirect ‘free market’ approach allows citizens to make their own decisions based on a combination of financial incentives (to encourage specific behavior) or penalties and taxes (to discourage behavior). Income taxes include both the direct and the indirect approach.
Basically, income, business, and real estate taxes are simply the way governments raise money to pay for all the services they provide such as schools, roads, police, hospitals, etc. It gets complicated – and “political”. According to my teacher – when you factor in deductions and tax credits on things like mortgages, equipment depreciation, paying tuition, and business losses.
The decisions about what to include as tax deductions / tax credits are by definition “political” as they are somewhat arbitrary. Politicians write the tax laws; Your decision about what to call a “deduction” often depends on who is lobbying the hardest or making the biggest campaign contribution.
The tax code also shows how our government supports certain public actions that are considered important for the common good. For example, home ownership was considered desirable; Therefore, the tax code includes a home mortgage allowance, making it financially easier for middle-class citizens and workers to buy houses.
Seven years ago I installed solar panels on my roof. They were expensive and required a second mortgage. I could only afford it because of federal tax credits and incentives from my electricity company. Thanks to good public order, I was able to do something I couldn’t have afforded. Something that has been good for the planet and will help Vermont achieve our goal of reducing our dependence on fossil fuels.
For decades, oil and gas companies have received huge tax breaks to promote domestic oil and gas production. Globally, fossil fuel companies received direct and indirect subsidies of $ 5.2 trillion in 2017. Maybe that made sense years ago, but why continue to subsidize fossil fuels when there is a need to reduce carbon dioxide emissions?
A columnist recently whined about renewable energy companies and individual homeowners (like me) getting tax breaks on solar panels, wind projects and electric cars, though those tax breaks pale in comparison to fossil fuel subsidies. For those who like clean air, water, and soil, it is good public policy to impose taxes on fossil fuels and give tax subsidies to renewable energies.
Why? Because fossil fuels pollute our environment, costing us billions of dollars to clean up after hurricanes, oil spills and forest fires, adding countless billions more in medical and medical costs. Why subsidize energy sources known to cause health problems and climate disasters?
We drive more miles per capita in Vermont than in any other state. This means that our transport sector accounts for a large part of our “carbon footprint”. The Transport and Climate Protection Initiative (TCI) is an example of how the free market can be used to influence people’s driving behavior.
TCI is a regional proposal to reduce greenhouse gas emissions from the transport sector by creating incentives for people to make decisions that represent good public order, e.g. B. Driving fuel-efficient cars instead of gas guzzlers. The free market works. In 2008, when gasoline was almost $ 4 a gallon, people stood in line to buy a Toyota Prius. When gasoline dropped to $ 2 a gallon, fuel-efficient cars were abandoned for SUVs.
Good public order should support things that benefit society, such as family businesses, home ownership, public education, affordable health care, and clean, renewable energy. I would like to see more financial incentives from both the state and federal government to help workers buy electric cars and trucks, heat pumps, clean wood and / or pellet stoves, and solar panels.
It is time to stop giving oil and gas companies billions of dollars in tax credits that they don’t earn, and to invest some of that money in rebuilding our infrastructure and moving our energy sector to clean renewables. We would create millions of well-paying jobs and provide our grandchildren with healthier environments to live in.
Carl Bucholt lives in Manchester.