Volcker Should Advocate VAT and Drop the Carbon Tax Recommendation 26 comments
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Paul Volcker, the Fed Chairman who brought down inflation under Carter and Reagan, may be the most competent economist among Obama's advisors. He was brought into the Obama administration as window dressing because, believing in the discredited man-made global warming theory, he advocates carbon taxes.
Now he is Chairman of Obama's President's Economic Recovery Advisory Board (PERAB), which is supposed to recommend a carbon tax. However, he deviated from script, probably to the consternation of President Obama, by advocating a Value-Added Tax (VAT) as an alternative to the carbon tax.
Here is a selection from Henry J. Pulizzi's WSJ blog about what Volcker told PBS last week:
Volcker suggested a tax on consumption should be among the changes under consideration if expenditures aren’t brought under control. He said “there are many choices” beyond a value-added tax or an energy tax.
“Those are two big ones. It doesn’t have to be one of those two,” Volcker said, adding that “I’d love to see the expenditures held in check so we don’t have to do that.”
“My tax philosophy would be if we can’t deal with our expenditure loan with the present tax system, we’ve got to think about changing the tax system,” Volcker said. “When you think about changing the tax system, given the problem that we started out talking about, you’ve got to talk about some tax that hits consumption.”
Although both a carbon tax and a VAT would decrease consumption and bring in much revenue, that's where their similarity ends. A carbon tax would destroy the American economy by making all American products less competitive in international and American markets, while a VAT would be neutral in international markets, and a positive in American markets.
The biggest advantage of the VAT is that it is border adjustable, meaning it is charged on imports but excluded from exports, thus not interfering with the competitiveness of American products abroad and making American products more competitive at home, especially if it is part of a package that brings down other business taxes. It is an especially good choice for a trade-deficit country, like the United States.
If Obama would use the VAT to eliminate our corporate income tax and payroll taxes, then his tax reform would jumpstart the American economy. On the other hand, if he enacts a carbon tax, he would make the American economy much worse.
An American carbon tax only makes sense if you are anti-American or if you don't know about the relatively new field of cosmoclimatology and its accumulating evidence that solar activity and cosmic rays are the primary drivers of global temperature changes, not carbon-dioxide concentrations.
Paul Volcker is still an excellent economist and he is definitely not anti-American. If he were to read the cosmoclimatology research, he would quickly drop his recommendation of a carbon tax and then simply advocate a VAT.
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A VAT tax would mean higher taxes for those making "less" than $250,000 per year.
SA really ought to put an edit button on here.
Hopefully, it will create more opportunities for a true barter trade underground. Consumers will find substitutes for manufactured goods, whether they be recycled, reused, rebuilt, or shop-made. Repairmen will have jobs again. We won't throw out our TVs because the part costs more than a new set.
Mostly, the fomenting of grassroots anger is what I'm rooting for in Washington these days. Utter rage by the serfs directed at their lords. When the government fears us, we will start to taste Liberty again (hat tip- TJ).
Let's not forget, when we steal from the haves and the used to haves, and give it to the politicians, it's for the greater good!
> I highly encourage the current deficit spending policies and Ponzi-government
> to continue. I do not want fiscally responsible behavior from the
> US gov.
> You may think I sound mad even though the above is exactly what we
> will get. My investment strategies are all based on the madness continuing...which
> I intend to profit from continuously while living outside the US.
If your plan works, they will probably blame people like you for the whole crisis... Like it's YOUR fault the government keeps spending more than it takes in... You saw the madness, and tried to make lemonade when life handed you a lemon.
These scapegoat thirsty politicans will talk about greedy people like you ( that didn't want to get financially taken advantage of) and try and confescate your wealth somehow violently or non violently.
I think his method is smarter.
On Oct 08 12:02 PM John Galt wrote:
> On Oct 08 09:56 AM Hot Richard wrote:
Are you joking, or should we just conclude that you don't know what you are talking about. Solar activity is not a primary driver. The science says that carbon dioxide concentration is a primary driver and is extremely well correlated with global temperatures. Try reading some books on climate change, instead of spreading misinformaton.
Cosmoclimatology is turning out to be extremely predictive, as the current response of the earth to lower solar activity indicates.
But I find the most convincing evidence to be the correspondence between the solar system's travels through the spiral arms of our galaxy and the ice ages and greenhouse ages of the last 500 million years.
The close fit of cosmoclimatology to this data leaves little variance left for other theories to explain. See:
www.atmos.washington.e...
There is no known reason why CO2 concentrations have the same periodicity.
Howard
On Oct 08 01:25 PM fjd10595 wrote:
> "Cosmoclimatology and its accumulating evidence that solar activity
> and cosmic rays are the primary drivers of global temperature changes,
> not carbon-dioxide concentrations"
>
> Are you joking, or should we just conclude that you don't know what
> you are talking about. Solar activity is not a primary driver. The
> science says that carbon dioxide concentration is a primary driver
> and is extremely well correlated with global temperatures. Try reading
> some books on climate change, instead of spreading misinformaton.
On Oct 08 01:25 PM fjd10595 wrote:
> "Cosmoclimatology and its accumulating evidence that solar activity
> and cosmic rays are the primary drivers of global temperature changes,
> not carbon-dioxide concentrations"
>
> Are you joking, or should we just conclude that you don't know what
> you are talking about. Solar activity is not a primary driver. The
> science says that carbon dioxide concentration is a primary driver
> and is extremely well correlated with global temperatures. Try reading
> some books on climate change, instead of spreading misinformaton.
Another idea is for states to double their sales tax on imported goods and eliminate it on domestic US produced goods. States aren't covered by the WTO.
On Oct 08 06:23 PM Tom E. wrote:
> I agree that a VAT would be better than a carbon tax.
>
> Another idea is for states to double their sales tax on imported
> goods and eliminate it on domestic US produced goods. States aren't
> covered by the WTO.
Tax increases are the wrong thing to do during a recession, unless your goal is to destroy the U.S. economy and make us all dependent on government handouts.
Oops, that must be it.
WTO rules authorize "border tax adjustments" to "harmonize" tax levels. If the U.S. enacted a carbon tax, it could also tax the carbon content of imported goods at an equal rate. That's a big incentive for our trading partners to enact their own carbon taxes so they'd capture the revenue we'd otherwise collect at the border.
It's much simpler to harmonize a carbon tax than to figure out how to implement and link cap-and-trade systems across national borders. Linked cap-and-trade systems create perverse incentives for countries to set loose caps and to enforce weakly.
See
Imagine: A Harmonized, Global CO2 Tax
In your comment above, you advocate that the place the carbon tax on imported goods, but not that the United States subsidize our exports at the rate of the tax. Why?
If there are no export subsidies, than US exports would face a disadvantage in world markets if we enact a carbon tax.
Howard
On Oct 08 11:21 PM Howard Richman wrote:
> User 497819:
>
> In your comment above, you advocate that the place the carbon tax
> on imported goods, but not that the United States subsidize our exports
> at the rate of the tax. Why?
>
> If there are no export subsidies, than US exports would face a disadvantage
> in world markets if we enact a carbon tax.
>
> Howard
"there are plenty of scientists who don't believe carbon is the cause..."
Really? My obversation is the opposite of what you say. Most believe in the link between carbon and temperature. What do you define as "plenty". There are always contrary opinions. That is the way science works, there is a constant examination and reexamination of an issue. We understand that. The point is that the consensus is that there is a link. Do you take medicines, or know anyone who takes them? Do you doubt the science behind the use of medicines? Read some books.
On Oct 08 05:08 PM optionsgirl wrote:
> Even if carbon dioxide did cause climate change ( and there are plenty
> of scientists who believe it doesn't) why would you believe a system
> of trading carbon tax credits would "cure" anything? Don't you understand
> that this is still another tax, disguised as a solution to "climate
> change"? All John Q. Public gets out of the deal is higher costs
> for energy.
You need to do a little more research. While it may be true there is a co-relation between CO2 and global warming, there certainly is no conclusive evidence of cause and effect. I suppose you think the rooster crowing makes the sun rise.
With US GDP around $14 trillion, the difference between 28% of GDP and, say 40% of GDP, is a whopping $1.68 trillion. That would put our tax collections as a % of GDP somewhere between the UK and France.
It's coming. Bet on it.
For one thing, I know how to spell observation. Do you?
On Oct 09 02:11 PM fjd10595 wrote:
>
> "there are plenty of scientists who don't believe carbon is the cause..."
>
>
> Really? My obversation is the opposite of what you say. Most believe
> in the link between carbon and temperature. What do you define as
> "plenty". There are always contrary opinions. That is the way science
> works, there is a constant examination and reexamination of an issue.
> We understand that. The point is that the consensus is that there
> is a link. Do you take medicines, or know anyone who takes them?
> Do you doubt the science behind the use of medicines? Read some
> books.
I'm no scientist, but I think that that big yellow hot thingy that makes me squint when I look at it probably has something to do with the temperature when I walk outside of my house.