Taxes Called Greatest Environmental Threat Seattle Research Center Concludes Governments Subsidize Polluters

An environmental research center based in Seattle has ended a 3-year-long search for the world’s worst environmental culprit with a surprising conclusion:

“Taxes are the single greatest threat to our environment,” said Alan Durning, executive director of the Northwest Environment Watch, a regional offshoot from the non-profit Worldwatch Institute.

“Governments tax all the wrong things. They tax us for working, saving and investing, but they subsidize people who pollute and wreck the landscape,” he said.

Durning, in a new book, “This Place on Earth,” proposes major shifts in federal, state and local tax policies, ranging from cuts in income taxes and elimination of mortgage interest deductions to the imposition of a tax on air pollution.

New taxes should be levied on chemicals and raw materials, virgin timber, plastics and even fresh water impounded behind dams or withdrawn from rivers and aquifers, he said.

“Tax dollars subsidize many of the activities that cause the most damage to our forest, air and waters,” he said. “We ought to tax people for making messes, not for making money.”

Sounding more like a conservative economist than a social activist, Durning argues that income taxes and payroll taxes discourage hiring. Paying a worker $10 an hour costs business $13 or more, he said.

“These taxes are dead weight on hiring and wages and powerfully push the entire economy to conserve workers rather than natural resources,” he said.

Other findings:

State and local taxes are rife with counterproductive provisions, often exempting from retail sales taxes such things as gasoline, natural gas, electricity and water.

Tax exemptions and loopholes often encourage sprawling real estate development and polluting industries, such as oil drilling, corporate farming and logging.

Mortgage interest deductions give tens of billions of dollars of housing assistance to the rich each year, far more than low-income housing programs provide to the poor, while encouraging sprawling real estate development.

Exempting buildings from property tax, shifting the tax entirely onto land values, would slow sprawl and lower housing costs for the poor.

“A lot of the stuff they are proposing is pretty flaky. But in concept, I think they have a point,” said David Keating, executive vice president of the National Taxpayers Union, a conservative tax watchdog group.

Keating said his group shares concerns about subsidies for extractive industries, “but it is a complicated issue.”

“The property tax changes they suggest may promote more development rather than less. And you can get into a real debate over what pollutants should have the heaviest taxes on them,” he said.

William Gale, an economist at the more liberal Brookings Institution in Washington D.C., said a formal tax plan adopting such principles would be difficult to implement.

“But as a broad aspect principle, the idea of taxing activities that generate pollution is a sound one. Clearly improvements can be made in that direction,” Gale said.

In the Pacific Northwest, Durning said, hundreds of millions of dollars a year go to subsidies for public lands ranchers, loggers and miners. Billions more go to drivers of vehicles, irrigators and aluminum smelters.

“There is a wide gap between true costs and market prices,” Durning said. “Federal gas taxes do not cover the military costs of protecting access to Middle Eastern oil, nor of paying the medical bills of car crash victims who are on Medicare.”

Jerry Taylor, director of natural resource studies at the Cato Institute, a Washington, D.C., think tank, said Durning is “a fine analyst who I agree with more often that not.

“Here, he’s half right and half wrong. Where he is wrong, he is very, very wrong,” Taylor said.

The Cato Institute, which tends to advocate free markets, agrees “we are taxed too much and on the wrong things,” Taylor said.

“But the remedy of turning to pollution taxes is very ill-considered,” he said. U.S. businesses already spend $200 billion annually complying with state and federal environmental regulations, he said.

“You can argue they are not factored enough, but to say that environmental damages done by certain technologies or industrial practices are not included in the price is just wrong,” Taylor said.

Taxpayers generally cast a wary eye toward any proposal that supposedly would eliminate old taxes to make way for new ones, Keating said.