New Yorker - Not Insane
If the economic crisis necessitates a second stimulus—and it probably will—then a payroll-tax holiday deserves a look. But it’s only half a good idea. A whole good idea would be to make a payroll-tax holiday the first step in an orderly transition to scrapping the payroll tax altogether and replacing the lost revenue with a package of levies on things that, unlike jobs, we want less rather than more of—things like pollution, carbon emissions, oil imports, inefficient use of energy and natural resources, and excessive consumption. The net tax burden on the economy would be unchanged, but the shift in relative price signals would nudge investment from resource-intensive enterprises toward labor-intensive ones. This wouldn’t be just a tax adjustment. It would be an environmental program, an anti-global-warming program, a youth-employment (and anti-crime) program, and an energy program.
As quoted in ma blerg March 24, 2009. (You can’t reblog yourself, sadly.)
It’s nice to see then that Obama’s finally getting around to the smallest part of that then.
(In fairness to the other side of the issue, the trouble with cigarette taxes and lotteries is suddenly the state starts promoting those bad things in order to keep revenues up. So, maybe too many Pigovian taxes could have unexpected side effects. Still it’s worth trying before you give it up as too corrupt.)