The Pollution Tax

Al Gore proposed that we institute a carbon tax on the carbon emitted by any company. This is a good idea so long as it applies to every company that sells anything in the US. I also believe that while carbon is important to Mr. Gore, the US should be concerned with global pollution and the tax should be based on pollution.

The US imposes expensive regulations on its manufacturers while China and other countries do not. Regulations and taxes should be designed not to impose unequal burdens, but to level the playing field. There is no incentive to improve pollution performance if your competitor will not do the same. We now compete in a global marketplace, but we can only control what occurs within our borders.

The pollution tax should be an amount high enough so that it is cheaper to comply with anti-pollution regulations. It should be applied to all US companies and to all importers of goods into this country. There should be two levels or considerations, one on the plant itself and the second on the products sold in the US. It is not terribly helpful if a clean facility produces polluting products.

The pollution tax would be a set percentage of the value of the goods produced in the facility no matter where they end up. Each company, foreign and domestic, would have the EPA investigate its facilities and product, and then grade them as to how well they meet US standards. Foreign companies that import into the US would be required to pay the EPA to perform this service.

If the company passes, then the tax is waived. If it fails, then a tax is imposed based on the level of non-conformance. Each year the standards should be increased and the tax increased for non-conformance. This should be clearly set forth so that everyone understands what is coming.

If a foreign company refuses to pay to have the EPA inspect the facility, then the tax is imposed and imports are prohibited from that manufacturer. Imports will be allowed once the outstanding tax is paid and the EPA is permitted to inspect and grade the facility. Once graded, the new and adjusted tax, if any, is due going forward. So long as it is paid, imports are permitted. It will be the requirement of importers to make sure that all imports include a seal of approval from the EPA.

Pollution Correction Rebate: The entire pollution tax will be used exclusively to help US companies comply with the required standards. US violators pay the tax, but once they prove they have corrected the problem, the costs of making the corrections will be reimbursed by the government from the taxes from all companies, foreign and domestic. Any costs incurred to meet new standards would come from the Pollution Tax fund.

Since this applies equally to foreign and domestic companies, it would go a long way toward balancing one of the inherent inequities between US and foreign manufacturing. Since the proceeds go toward helping US companies comply, it benefits US industry and cleans the world at the same time.

International standards applicable to all companies would likely be developed. The US will likely develop arrangements with certain countries to perform the review on the EPA’s behalf. In the end the US is a leader in environmentally clean industry and US manufacturing gains a modest advantage over competitors from polluting countries, at least until the world is a clean place to live.