Harvard Professor N. Gregory Mankiw discussed pigovian taxes in his blog and his support for these taxes. Pigovian taxes are simply taxes on gasoline or alcohol or tobacco, et cetera that have made the claim that they will help society by reducing the long run gasoline prices, reducing pollution, solving road congestion and most importantly, helping the budget eliminate the disequilibrium, the deficit.
While all of these claims are seemingly the cat’s meow it is simply a cause of more serious issues including taxing on taxes, improperly solving the polution problem, and redistribution of wealth. I do have a hard time refuting the objective of reducing the overall debt, but not through increased taxes.
Sure these taxes produce a reasonable argument, taxes are still taxes. When the people already pay income taxes, why not add on consumption tax? This method of taxing on taxes gains more profits for the government at the expense of ethics and your hard earned dollar.
The pollution problem most certainly should not be solved through increased taxes. Cap and trade is an inefficient method of reducing pollution, as it is one of the many government perils of intervention; taxing polluters causes businesses to be harmed and certain individuals as well. With taxing gasoline, it is expected that less people will use the roads and sequentially, the pollution will go down. The true problem is not solved by taxing, it should be solved by lawsuits. Those who are concerned so greatly with pollution are provided the right to sue anyone causing harm or nuisance.
Finally, redistribution of wealth! Some economists simply feel that the government is good and productive; I, on the other hand, see the State Auditors playing three hours of bridge during their eight hour workday. Taxing more on gasoline to reduce road congestion should lead to wealthier persons on the road and less of the less fortunate. Consequently, the rich pay the taxes while the poor gain the benefits of the rich paying off the national debt. This is strictly robbing from the rich to feed the poor. Take a minute to think about pigovian tax; it sounds good,but it is unethical and a poor approach.
Professor Mankiw, maybe you should reconsider your pigovian endorsement.
Funny how they can recognize that taxing gasoline will result in less gasoline being used, but can’t see how taxing businesses results in less business being done.