Legal & Policy Challenges

Incentivizing Sustainability Through a Tax Code Based on Consumption

Our tax system is screwed up. We're taxed for owning a house; we're taxed for owning land; we're taxed for having a job; we're taxed for pretty much existing. While it's true that taxes are necessary for a government to function, they don't have to be this numerous and/or complicated. There are thousands of pages of tax codes in Washington that are way too complicated for the average American to understand. Corrupt businesses and individuals can find loopholes and disclaimers to give themselves immunity from certain taxes and sometimes avoid paying millions of dollars that should have been paid. Most people agree that this is a slap in the face to "equality" and agree that the tax codes need to be simplified.


Not being satisfied with any of the currently proposed systems, I came up with a detailed outline (it was going to be a long article, but I stopped after the outline stage haha) of how I think businesses and taxes should be handled in this country. My tax system is a tax system based on reducing consumption and incentivizing post-consumer products along with sustainable practices. It's a fact that taxes are generally viewed by the public as bad things, so wouldn't it make sense to tax bad things instead of good things like income? The fact is that we can't go on consuming, consuming, consuming because we live on a finite planet. Eventually, we will run out of earth to consume. If we penalize the use of natural resources and incentivize sustainability, we will do the earth a very big favour. The following is a rough outline of my idea of the perfect 21st century tax code.


General rules for all entities:


1. Energy consumed is taxed. It is seen as buying a product from an energy-producing company.

-Energy producing companies still need energy and also generally use natural resources to create energy, so they will be taxed.

-Companies which produce energy by alternative methods (wind, solar, etc.) will be taxed on consuming the materials to make the turbines, panels, etc., but not for the energy they produce using these methods because it's not consuming natural resources.


2. Salaries for workers will not be taxed because "people are not a resource." You can't buy time/labour.

-Taxing money given to workers will cause the company to give out less to workers, lowering salaries, and hurting the workers.


3. Sales will not be taxed from the vendor-point; only from the consumer-point. Taxing both would be double taxing.

-Companies will charge a certain amount for a product. Then tax will be paid directly to the government so companies can't interfere.


4. Donations to charities will not be taxed.

-A person is "giving" to the charity, not "consuming" the charity.

-This may cause problems with the definitions of "donation" and "consumption." Tax cheats could possibly claim they were donating to a charity when they aren't.

-Would have to be enforced by a government organization.


5. Buying waste products will not be taxed.

-All companies have goals (i.e. "This company will make plastic bottles"). Any product/good that can be used to meet that goal can not be claimed as waste.

-By-products or non-necessary materials that can in no way contribute to the goal of the companies is "waste."

-Companies cannot declare a goal to make waste.


6. No property is taxed except property dedicated to a landfill.

-A company can either sell its trash, reduce the amount of trash created, or buy a landfill (they can't just let it pile up).

--Since greenhouse gas emissions are also "waste," companies will be taxed on those.

--Since selling its trash increases revenue instead of cost, selling will be incentivized.

-Goods that can't be recycled or reused will always end up in a landfill.

--This will cause the company that buys those goods to lose money for owning a landfill, so no company will buy it.

--This discourages non-recycleable production.


7. There are no other taxes!

-Individuals do not pay social security, medicare, etc. The funds come directly from tax dollars produced from consumption.




Base companies (extract natural resources from the earth)


1. Company expenses are mainly composed of energy costs and buying equipment from other companies. These costs are taxed.

-The only way a company will be profitable is if the value of the extracted goods is greater than the cost of energy.


2. They will not have to pay a tax on basic consumption because they will simply be taking materials from the ground

-This seems to give an incentive to natural resource depletion, but companies that buy goods from base companies have to pay tax. Companies that buy post-disposal goods don't.

-Other companies will therefore be less likely to buy from these companies because it will cost more.




1st tier companies (buy resources directly from base companies)


1. Company expenses consist of business transactions wherein goods are bought from base companies and other companies. These will be taxed.


2. Company will use energy and purchases to convert raw goods into new products, which are then sold.

-Buyers will primarily include other companies.




High-tier (consumer) companies (buy resources primarily from 1st tier companies)


1. Taxed on purchases from other companies.


2. Will use energy and purchases to combine goods into bigger "super"-goods, which will eventually be sold straight to consumers - no other companies.


3. Retail stores, department stores, clothing, etc.




General population/Consumers (don't sell anything; buy only)


1. Receive money from work done for companies.


2. Won't produce/sell anything, and all purchases are consumption, so all money is taxed (except savings and donations)


3. Buy goods for use then discard them.




Post-disposal companies (buy waste products to sell them again)


1. Buy waste from consumers/commpanies to make new products from them. Since these goods are "waste," their purchase will not be taxed.


2. Only taxes paid by these companies is energy/equipment.

-A post-disposal company that produces its energy from renewable sources and buys post-disposal equipment will thus pay no taxes.

-Incentivizes post-disposal companies and sustainable living.


3. Company will turn waste into "new" products and sell them to consumers.

-Consumers will still be taxed for this consumption (because buying recycled stuff is still buying stuff).



31 votes
Idea No. 87