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Re: E-M:/ greening Michigan's tax code
Enviro-Mich message from "Molly Cole" <COLE@maelstrom.cc.wmich.edu>
Don't bother to read this unless you're really interested in exploring this
tax code stuff further. If you are interested, this is great timing. Below
is information on an online discussion for the month of September put
together by the Center for a new American Dream. The discussion is being
facilitated by a neighbor from Minnesota, Michael Noble. There are some
real bright people who join these discussion, like Donella Meadows so I
hope you join, learn and enjoy.
Date: Wed, 2 Sep 1998 18:18:55 -0400
From: Center for a New American Dream <email@example.com>
Subject: Environmental Tax Reform conversation kickoff -- Michael Noble
From: Michael Noble
Environmental Tax Reform In the States: Can it Really Happen?
Saint Paul, MN, August 31,1998-
Hello to the New American Dream cyber-network! I am writing from the sixth
floor of the restored art deco Minnesota Building overlooking the
Mississippi River. Visit us anytime: you can come up river by paddle, at
least until our local airline monopoly resolves its pilot strike.
Or if you are watching your own carbon balance, visit on line instead at
www.me3.org. Here you'll find a veritable cornucopia of information and
links on energy efficiency and renewable energy, the electricity industry,
urban sprawl and this month's topic on CNAD's forum: ecological tax
reform. A complete look at our work in this area is at
You can call this subject by any name you want: green tax reform,
eco-taxes, tax-shifting, internalizing external environmental costs,
market-oriented environmental policy, or as our pollster would prefer we
call it: "Making Polluters Pay While Giving YOU a Tax Break!"
Who is ME3, and why are they having so much fun?
Like many energy and environment groups from Orlando to Olympia, and from
Bangor to Baja, at Minnesotans for an Energy-Efficient Economy we are
working on moving society toward less energy use, less pollution, and
greater reliance on clean renewable energy sources. ME3 only has a staff of
four, but we are highly integrated in our research and work with a dozen
member organizations who share our goals and vision. Kind of like the hub
of a wheel, in the area of energy policy, ME3 coordinates and organizes the
researchers, activists, canvassers and lobbyists working at a cadre of
great environmental organizations here in Minnesota.
At ME3 and among our member groups, we have a fun and productive program of
research, organizing and communications and we have many accomplishments to
show for it- including the largest windfarm in the world, 107 megawatts to
be dedicated September 26. (It will be a bigger victory when we have
dedicated 107 one megawatt wind energy projects, but that is a different
What's a pollution tax shift, anyway?
One of ME3's toughest challenges has been a multi-year effort to change the
tax code of the state of Minnesota. We want to shift the current tax burden
off of work and productivity, and onto waste and pollution. Despite
mounting evidence that you cannot pass landmark legislation relying on the
courageous few lawmakers, we stubbornly believe that unless we find a way
to incorporate pollution and waste into the cost of energy, using the sky
as a dump for pollution will continue to be a good deal. Mercury in our
lakes will continue to rise, smog will grow in the cities, and greenhouse
gases will expand. Until the energy market recognizes the cost of
pollution, energy efficiency and renewable power will have only a small
fraction of the market.
For purposes of this discussion, the Minnesota tax-shift proposal is a
carbon tax, with a net offsetting tax reduction. It would amount to about
15% of the State's tax revenue, and would increase the price of energy for
homes and small businesses by about 3% a year for five years. We have
experimented with advocating cuts in payroll taxes or property taxes as the
offsetting tax cut, although this next year we are going to focus more on
how to get a double dividend by targeting more of the tax cuts to benefit
the environment (and mobilize more environmental groups in support.)
We have not accomplished this yet, and we have doubters even in our camp
who believe that the coal and oil interests will never allow a carbon tax,
or as we always call it, a pollution tax, no matter how the lily is gilded
or the horse pill is sugared (depending on your view).
I won't use my space to lay out the arguments in favor of changing our
taxes to reflect true costs. Several folks have done it well. See Paul
Hawken (The Ecology of Commerce), Jeff Hamond at Redefining Progress (Tax
Waste, Not Work), and earlier this year Alan Durning, formerly at
Worldwatch, now at the Northwest Environment Watch (Tax Shift: How to Help
the Economy, Improve the Environment and Get the Tax Man Off Our Backs).
Neither will I give you a blueprint for how to advocate your own local tax
changes that might change the economics of pollution. Instead I will refer
you to Friends of the Earth great new handbook for activists on eco-tax
reform, just out this week.
Instead, I'd like to tell you what we've done wrong, and how we got smarter
along the way. After all, if you are in the policy change business, you
have to measure success by real changes in peoples lives and the rules of
How can we not win with such a great idea?
December 1997 public opinion research demonstrated that by a 55% to 20%
majority, Minnesotans favor reducing taxes they pay on work or property and
increasing taxes on fossil fuels. More interesting, there was no partisan
or ideological divide among the public: self-described conservatives,
liberals, Democrats and Republicans all support it by a margin of 3 to 1.
So far, so good.
On top of that, economists love this idea: Peggy Duxbury, formerly at
Redefining Progress found 2500 economists to sign an Economists' Statement
on Climate Change, which said, among other things that carbon/energy taxes
made sense, especially if the revenue is plowed back into the economy in
lower taxes. More than 25 signers were Minnesotans. Again, so far so good.
With the help of the Tellus Institute in Boston, ME3 distributed an
econometric analysis of a Minnesota tax-shift, showing pollution falling,
incomes rising and many kinds of businesses with a positive net. Most
businesses, especially the knowledge-intensive business that are providing
most new jobs would benefit from a tax shift to environmental taxes.
According to research by one of our partners in this project, the Institute
for Local Self Reliance, even energy-intensive businesses were largely
protected. The proposal encourages them to move forward in efficiency and
competitiveness by taking advantage of loans and incentives and partial
exemptions available in the model legislation. Overall, the package of
changes can be progressive with respect to income, by careful use of tax
recycling and partial exemptions. Still with me? So far it's a winner,
Filling the information gap has not made a big difference in selling this
idea to the business community, or to organized labor: rightly or wrongly,
they would rather hate the taxes they already hate, than have to learn
about new ones. Trust is very low that the shift would be revenue-neutral.
So in our next iteration, look for a net tax cut!
Beware global warming.
Similarly, we allowed our tax shift work to get mixed up with our global
warming communications. A program of communications on global warming
impacts on local natural resources has been an important part of our work,
and the two themes were generously blended by tax change opponents.
While we were writing and editorializing that Minnesota resources, like
forests and fisheries and wetlands are all particularly hard hit by global
warming, this issue became an easy target for opposition: if Minnesota
completely and totally eliminated its carbon emissions, the world emissions
would fall by ?%. My reaction of course is "Wow! we're big polluters! As a
rich state in a rich nation, we should take the policy and technology
leadership". But to your average legislator, an easier message to accept is
"Hey, this is an international problem, (if it's a problem at all); what
good does it do Minnesota to take any initiative?"
In the past year, we have developed a clarity that climate change education
and tax-shift advocacy are not a good marriage. The polling we've done
tells us that even though 2/3 of Minnesotans think that global warming is
serious or very serious, the skeptics support an environmental tax shift at
the same percentage as global warming believers.
Similarly, we found that our arguments in favor of environmental tax reform
that we are taxing the wrong stuff were not so convincing to a lay public.
According to the polls, the best reasons for higher taxes on pollution (and
lower existing taxes) are environmental arguments related to air and water
pollution, not economics lessons or climate protection pleas. Of a dozen
messages tested, the three most convincing messages were: (1) making
polluters pay their fair share, (2) protecting future generations, and
especially protecting children from asthma and illness, and (3) (write this
one down) responding to the early warning signs that deformed frogs are
telling us that there's something wrong with the environment.
After this kind of research on message, we might see more letters to the
editor from our members that say: "Why can't we give a break to working
families on property taxes, by making polluters pay their fair share.
Everyone knows that asthma in kids is going through the roof, and what
about that mutant frog thing? Isn't it high time we recognize these early
warning signs and act now to reduce pollution in the environment. A tax on
polluters is just the thing for the job."
In addition to a new plan for strategic communications, we have a new civic
and grassroots organizing plan that will be built around a new tax reform
proposal that will be broader and deeper, with more sugar for the "horse
Hopefully, a broader bill will unite the broadest part of environmental and
habitat community (read: hunting and fishing groups). In addition, the new
proposal will recognize that, like many states, Minnesota is in a time of
budget surplus, so we will cut more taxes than we raise, and we can target
tax cuts, tax credits and tax incentives to good stuff for the environment.
A summer process of communicating with all the Minnesota environmental
organizations that have policy goals, active memberships and or lobbying
capacity is winding down. We are looking to build a campaign that is
broader than energy and environment alone. Tentatively, we'll call it
A revenue-neutral tax-shift is not a grassroots campaign.
The policy concept that we have pushed to date is a pure revenue-neutral
tax-shift, not a tax reduction or a revenue increase. It has no natural
constituency. Credit goes to Marie Zellar of Clean Water Action for helping
us understand that we want a plan that people can ring doorbells about. Net
tax reductions would attract interest from the constituency that would get
lower taxes. A revenue increase would appeal to constituencies that seek
more government funds, for example, educators or construction trades. Even
the citizens participating in the focus groups wondered why the revenues
were not used for pollution prevention, rather than 100% for tax
reductions. A U of MN economist, Ford Runge, argued that some revenues from
carbon taxes should be used for direct investment tax credits in pollution
prevention to accelerate the benefits of the shift.
Fundamentally, a tax-shift is regarded by economists and policy experts as
an elegant innovation. Unfortunately, it draws no zealous enthusiasts from
the body politic, because, for the most part, most individuals and
companies will end up more or less the same as they are now, except those
who are very low carbon users or high users. Expect the high users to be
goaded by the Carbon Club, and expect them all to be well-motivated. See
the coal industry-funded astro-turf coalition at
http://www.affordable-energy.org/ supporting your right to low-cost
Focus groups tell us that we should target incentives and tax breaks to new
innovative technology and solutions to the problem. Interesting, even
conservatives would rather use part of the tax revenues to tackle
environmental problem from energy use, rather than let the carbon taxes
work by themselves to transform markets. In 1999, our model tax reform will
try to incorporate the best new ideas, best incentives, and best messages
to provide some embellishment for an otherwise stark policy choice.
To jumpstart this discussion on green tax reform, please consider:
1) What's the best way to defeat astroturf campaigns such as Partners for
Affordable Energy (http://www.affordable-energy.org/)
2) What do you think of ME3's decision to shift away from revenue-neutral
tax shift strategy?
3) What would it take for you to support an environmental tax shift? What
would it take to convince the average person in your community?
4) What do you think of the strategy of trying to implement tax shifts at
the state level?
End of conversation V1 #176
239 Moore Hall
Western Michigan University
Kalamazoo, MI 49008
Phone: (616) 387-2716 Fax: (616) 387-4998
"If you think you're too small to make a difference, you've never been
in bed with a mosquito."
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