The two premises are not necessarily contradictory, but seriously folks . . .
GM has been beating the drums for Pigou taxes for a long time. Some have thought this was a diabolical plot to lure Dems into regressive tax proposals, away from more politically feasible cap-and-trade (which is just a tax by another name). I do wonder about GM's logic in one respect. He makes out the issuance of permits to be a tax on consumers with no offset from auction proceeds. But the permits will be worth something to whoever gets them, by fair means or foul. That value goes to somebody, albeit not necessarily consumers. Let's say a firm with a low cost of pollution reduction gets permits. It can sell them for more than the costs of staying within its cap, so it does. The buyer may pass along the cost to consumers and maybe eat some as well. What happens to the seller's proceeds? It would seem to depend on the industry and associated market. Since the permit allotments are evidently just one big package, they look like a lump-sum subsidy to the firm -- unlikely to be passed along to the consumer as savings. That is the more salient issue I'd say. In general the assumption that the VAT and similar taxes are passed to the consumer I think are exaggerated. To be sure some of the burden shows up in prices, but there is evidence of incomplete 'ratification' of the VAT in price increases, which means some of it is shifted backwards. So the regressiveness of green taxes may be somewhat less than supposed. On Sun, Aug 9, 2009 at 12:42 PM, Jim Devine<[email protected]> wrote: > is my mind going? could it be that Greg Mankiw actually wrote a > half-decent column? > > (see http://www.nytimes.com/2009/08/09/business/economy/09view.html) > > -- > Jim Devine / "All science would be superfluous if the form of > appearance of things directly coincided with their essence." -- KM > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
