Why Don't We Tax Negatives More Than Positives (Like Income)

Every government, and every citizen of every country, faces the following challenge:

1) You need money to run a government.
2) This comes from taxes, which people hate.

When you send your returns in, do you have great feelings about doing your patriotic duty? No. You might tell yourself that to take some of the sting out of it, but overall you feel a third of your hard-earned dollars evaporating. The assumption that not enough people question is that Federal taxes must be INCOME taxes. Since people regard taxes as a punishment - and they always will - they adjust their behavior to game the system, to hide their income or even become less productive to decrease their income below a certain bracket. In response, such a system necessarily becomes more byzantine, and not only can the rich game it, a whole class of tax professionals grows up around it, doing nothing but taking MORE of your money to solve problems that your government has created in the first place.

Since taxes will always change people's behavior, why not tax things that you don't want people to do? We do this already in some cases, like with tobacco. How about pollution and waste-generation? How about increasing criminal penalties? Of course, implicit in this deal is as consumption and penalty taxes go up, the current income tax system has to disappear. Is this pie-in-the-sky? Not at all. Singapore has used this approach and in less than a half century it's gone from being a postcolonial swamp to the banking center of Southeast Asia. Many American cities would be glad to be as well-run and modern.

Of course, politicians who simplify our tax system would stand to gain massively in popularity - except with certain lobbies.

An obvious goal of this kind of taxation would be for environmental protection, and that's what the Bay Area Air Quality District is trying to do. I don't know many people anywhere on the political spectrum who think protecting the environment is BAD; people differ in how they prioritize it. As I've promoted before, the Bay Area has experimented frequently over the years. Sometimes the experiments are wacky, and sometimes they work. Improving air quality has definitely improved life in American cities - the first time I was in L.A. was in 1981 and I remember the smog, a coherent brown cloud hanging over the high rises in the center of town like a cartoon. It's much better today. The laws work. Some Latin American cities can remind you what life is like without emission controls - try Mexico City or Asuncion on a bad day. This isn't tree-hugging - this is wanting to take a walk without covering your mouth with a cloth. It's another step in improving health and quality of life, but it's also a step toward getting revenue by getting people to stop doing negative things, instead of taxing good things (like income) and pretending it's not making people cheat.

Most of the criticism of the proposed scheme seems to be that it's not comprehensive, that at the local level it can't do any good. As Governor Schwarzenegger often says - and specifically on this issue - if you wait for the Federal Government to do something, you'll be waiting forever.