Two readers vote Nay. This reader will believe a payroll-tax reduction only when he sees it:
The problem with offsetting payroll-tax reductions with a carbon tax is that, no matter how politicians protest to the contrary, we will just end up with both (in Massachusetts folks are still paying a temporary WWII era property tax on cars).
Fortunately, the weak economy gives politicians an out on carbon taxes: they can profess their belief that they are a good idea — for which the time is not quite right.
I’m having a Huckabee flashback: Sure, a Fair Tax is great — but amend the Constitution to eliminate the income tax first.
Another suggests that there is the likelihood of a disparate impact from a carbon tax:
Swapping a payroll tax for carbon tax is a flawed idea, because not everyone will experience the tax swap as neutral. Each decision to live in America or do business in America is done at an individual level, not at an aggregate level. While the average individual person may pay no more taxes initially with such a swap, an energy-dependent business will likely see increased taxation as a result.
Imagine an industrial business that has previously invested in a significant increase in automation. The new reduction in payroll tax will be heavily outweighed by a higher carbon tax. So that business would likely decline to invest further in America, and seriously consider moving its equipment and operation elsewhere.