In the book Tax Shift, How to Help the Economy, Improve the Environment, and Get the Tax Man Off Our Backs, Alan Durning and Yoram Bauman show how our tax laws encourage environmental damage and waste. The book discusses how taxes with perverse incentives can be replaced by a more rational and humane code which encourages conservation and thrift and does not punish responsible behavior.
Basic economic theory and practice tells us that if you tax something - income, or capital gains - less of it is produced. It makes sense to increase taxes on those things we want to discourage, such as resource extraction, non renewable energy, and to reduce taxes on things we want more of such as income, renewable energy, and green technologies. Our society has evolved from a frontier, resource extraction-based economy to an economy based on services, information, and high tech. Our tax laws have not kept pace with the rapid, fundamental changes that have occurred in our society in the last half century. The ideas put forth in Tax Shift are not new to the authors; they point out that tax reforms that more attuned to current social consensus have already been adopted in the U.K., Switzerland, Denmark, Germany, Finland, and Norway; and several states in the U.S. are considering some form of tax shifting as well.
We discussed the pros and cons of several of our current taxes and what should take their place with Alan Durning. Alan is director and founder of Northwest Environment Watch, a Seattle based research and education organization, and a former senior researcher with Worldwatch Research Institute in Washington, D.C.