Gilbert Metcalf (Professor of Economics)
‘I’d like to focus more specifically on revenue neutral tax shifts where environmental taxes are used to finance tax reductions. (…) our failure to avail ourselves of environmental taxes and charges means we are missing revenue opportunities which could help us tackle important fiscal issues in our federal budget.’
‘My overall message is that green tax shifts can provide considerable flexibility to policy makers to achieve difficult political and economic goals while contributing to a cleaner environment.’
‘Any regressivity in the environmental tax can be offset by progressivity in the tax reductions financed by the new revenues.’
From: Metcalf, Gilbert (date unknown) Tax Reform and the Environment: Paying for Fundamental Tax Reform. Department of Economics, Tufts University, Medford, MA.
'The GETS (Green Employment Tax Swap) reform uses the revenue to reduce payroll taxes by providing a rebate of the employer and employee payroll taxes on the ﬁrst $3,660 of earnings per worker. This amounts to a maximum rebate of $560 per covered worker. Given payroll tax collections of approximately $727 billion in 2005,15 a carbon tax of $15 per MT CO2 could lower payroll tax burdens on average by just under 11 percent. (…)The GETS reform beneﬁt is greatest for low-wage workers. For a worker earning $5,000 a year, nearly three-quarters of his or her payroll taxes would be rebated.'
'while a carbon tax may be regressive, a carbon tax reform can be designed to be distributionally neutral. The use of the carbon tax revenue to lower payroll taxes makes this distributional neutrality possible.'
From: Metcalf, Gilbert (2007) A green employment tax swap: using a carbon tax to finance payroll tax relief. World Resources Institute, Policy Brief.