Taxing raw materials instead of labor would incentivize more sustainable practices, but the unintended consequence is that it would disproportionately affect people lower in societies social hierarchy.
If you are a truck driver or construction contractor (blue collar) your productivity depends on resource consumption. Whereas if you are in finance or software (white collar), your productivity will not be affected by your consumption, aside from the purchase of a new computer every few years.
We would be giving up our progressive tax system. If you tried to keep elements of a progressive tax system, the rich would shift their consumption to the poor who would be taxed less for raw material consumption and we’d have very similar incentives to today, though with more wealth shifting to the poor. You could do a rebate program, where people with lower incomes get paid back the money they would have made without the tax system, but now we’re talking about setting up a bureaucracy to do means testing on significant proportions of the population, who would be least likely to take advantage of tax loopholes.
I’m trying to think of ways to keep this idea from being a regressive tax, but I’m failing. Anyone have wisdom?
Because of the cost of labour a lot of effort has been put into minimizing labour at the cost of capital (resources, automation etc). This again puts a negative pressure on wages as one would otherwise be automated away. By making labour cheaper there is less incentive to minimize labour at the cost of resource use (e.g. disposable products vs reusable ones that need maintenance). More demand for labour should increase wages for lower skilled labour. Less people would "drop out of the ratrace" so to say, as there is more demand for them. There is already implicit recognition for this in Europe. In the Netherlands it is very acceptable (albeit illegal) to not pay taxes for a cleaning lady. In Belgium there is asystem where everyone can get a few hours of subsidised household a week that negates the tax pressure, etc. But instead of all these small adjustments to make the tax system workable I would love there to be a wider debate on what the grounds for taxation should be. In my proposal you get taxed for what you consume in resources and land use, regardless what you use it for. I think that would be a pretty fair premise to start with, and perhaps a few exemptions are needed to make it work.
