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Old January 8th, 2012, 12:52 PM   #1
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Pigovian taxes

What are everyone's opinions on Pigovian taxes, taxes that are placed on activities with negative externalities? Things like alcohol taxes, pollution, etc.
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Old January 8th, 2012, 01:05 PM   #2
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What are everyone's opinions on Pigovian taxes, taxes that are placed on activities with negative externalities? Things like alcohol taxes, pollution, etc.
I can see both sides, but I don't like them. Like many other things they only effect poor-ass people. Every time Kentucky needs money they add a few percent to the price of beer or something. Makes it hard for a poor working man to afford a carton of beer. But I saw a guy two weeks ago buy 2 cases of 12 year old whiskey and not blink an eye.

Just shows if you have money you can have about anything you want.
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Old January 9th, 2012, 04:01 PM   #3
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I think they are necessary, but sometimes they're more trouble than they're worth. And of course, your idea of a "negative externality" may not be quite the same as mine.

For instance, the negative health effects of alcohol do not factor into the price, but they are also not externalized. Are you talking about noise from clubs or parties or something? I always thought that taxes on alcohol were "sin taxes."

But for something like pollution or carbon emissions, I do see the need. There is a libertarian idea that since you are harming others when you pollute, we should therefore get in the practice of individually suing polluters when they dirty your air or water or whatever. But that's a lot of suing to have going on and it's much easier to simply levy a tax.
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Old January 9th, 2012, 04:08 PM   #4
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I think they are necessary, but sometimes they're more trouble than they're worth. And of course, your idea of a "negative externality" may not be quite the same as mine.

For instance, the negative health effects of alcohol do not factor into the price, but they are also not externalized. Are you talking about noise from clubs or parties or something? I always thought that taxes on alcohol were "sin taxes."
I said alcohol because it was one of the classic examples Pigou (the economist after whom the tax is named) used. He argued that alcohol increases crime, hence the tax. I would say that when it comes to alcohol the net effect on crime varies depending on the price (complete abolition might bring more crime), but again I just said it since it is a classic example.
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Old January 9th, 2012, 04:37 PM   #5
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Ah.

Well I don't know if that's a good idea, or even just, because not everyone who drinks breaks the law. You'd be punishing a lot of innocent people for the actions of a few. People who break the law get arrested, and that's the discouragement.

And I doubt it would even work. Complete abolition DID (not just might) increase crime. People have shown that if they are dedicated to their drink, they are going to get it one way or another, regardless of the risks or price. So putting a tax on booze to stop crime, will only make the criminals (and everyone else) pay a little bit more for their shenanigans.

Now if you were taxing booze to pay for police or cleanup or whatever, it would go into the "tax the problem to pay for the solution" category . . . but you would still be taxing a lot of people who did nothing wrong.
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Old January 9th, 2012, 04:44 PM   #6
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Again, it was an example. On a side note, how do you feel about tobacco taxes or if marijuana were legalized a marijuana tax?
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Old January 9th, 2012, 05:03 PM   #7
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Again, it was an example. On a side note, how do you feel about tobacco taxes or if marijuana were legalized a marijuana tax?
Well, it came up, so I talked about it.

The government has to get revenue somewhere. And I feel that consumption taxes are a pretty good way to go about it. Wealth is created through investment, and that's something we want to encourage, yet most of the taxes we have today target that instead.

And I would gladly pay a marijuana tax, if that were an option.
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Old January 10th, 2012, 08:23 AM   #8
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Again, it was an example. On a side note, how do you feel about tobacco taxes or if marijuana were legalized a marijuana tax?
Oh we have the tobacco tax. It took a while getting it because Kentucky is a tobacco growing state. (Not so much anymore.) We used to have a certain amount we could grow and sell. Then came the big tobacco "settlement". Farmers giving up their "base" for payments. And the tobacco companies paying a lot of money to the state because of increased health care cost due to smoking. Seems some of that money never helped any cancer patients. It just got dropped into the general fund at some point and is now history.


By the way: If I smoked I would grow my own tobacco and roll my own. That way I could control the chemicals that growers add to it.

Last edited by DodgeFB; January 10th, 2012 at 08:38 AM.
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Old January 10th, 2012, 02:58 PM   #9
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Seems some of that money never helped any cancer patients. It just got dropped into the general fund at some point and is now history.
I think the issue with taxes should be, overall, are you getting from the government what you pay for in taxes? I mean, to a certain extent it is useful for the government to explicitly tax this particular thing to pay for that particular thing. But after too much of that, any honest person in government would find their hands tied.

The Red Cross, I believe, ran into problems like this after the earthquake in Haiti. People made a bunch of donations that were explicitly meant for Haiti. But there was a physical bottleneck getting aid into the country, and so they couldn't use all the money they collected. So they've got all this money just sitting there, and plenty of places around the world that need it just as desperately as the Haitians, but they can't use it because it was donated on condition that it go to Haiti.
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Old January 25th, 2012, 05:49 AM   #10
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Against - it distorts the market, creates a market in illegal supply (moonshine, unregistered cigarettes, hiding of polluted effluents) and helps diminish personal freedom.

For - it helps discourage behavior that costs society money (alcoholics, smokers and people exposed to pollution have more health problems) and raises money to help deal with those increased costs. If people are going to generate such problems, they should pay higher costs to help deal with such problems.
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Old January 25th, 2012, 08:15 AM   #11
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I'm of the opinion that taxes should go to what the taxpayer wants. Don't like an income tax? Opt out of SS. So I support this as it's a tax by choice.
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Old January 25th, 2012, 08:52 AM   #12
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I'm of the opinion that taxes should go to what the taxpayer wants. Don't like an income tax? Opt out of SS. So I support this as it's a tax by choice.
Yeah! Buy a gun, a dog, and a fire extinguisher and don't pay fire and police.
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Old January 25th, 2012, 03:25 PM   #13
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Yeah! Buy a gun, a dog, and a fire extinguisher and don't pay fire and police.
And what do you do when OWS decides that your local park looks like a good place to set up camp?
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Old January 25th, 2012, 05:34 PM   #14
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And what do you do when OWS decides that your local park looks like a good place to set up camp?
I would not care. We have a park 3 miles up the road. I drive by it several times a week. I have never been in the park. They have baseball, skateboard park and more. I wish it was still a farm.
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Old January 26th, 2012, 08:17 AM   #15
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Against - it distorts the market, creates a market in illegal supply (moonshine, unregistered cigarettes, hiding of polluted effluents) and helps diminish personal freedom.

For - it helps discourage behavior that costs society money (alcoholics, smokers and people exposed to pollution have more health problems) and raises money to help deal with those increased costs. If people are going to generate such problems, they should pay higher costs to help deal with such problems.
So are you for or against?

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I'm of the opinion that taxes should go to what the taxpayer wants. Don't like an income tax? Opt out of SS. So I support this as it's a tax by choice.
How does that tie into Pigovian taxes? I mean I guess you can phrase it like "the taxpayer wants alcohol which has a negative externality (and hence costs everyone else something) so he will be taxed for it". The point here isn't necessarily to generate revenue for anything, but to make the payer of the tax pay for any costs he places on society.
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Old January 26th, 2012, 05:53 PM   #16
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So are you for or against?


How does that tie into Pigovian taxes? I mean I guess you can phrase it like "the taxpayer wants alcohol which has a negative externality (and hence costs everyone else something) so he will be taxed for it". The point here isn't necessarily to generate revenue for anything, but to make the payer of the tax pay for any costs he places on society.
That's how I see it, yes.
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