Thursday, January 15, 2009

Apostle to Cato III: Epilogue (and Prologue)

Jerry Taylor has withdrawn from this debate. For now, at least.

You may each judge for yourselves†, but it seems to me, and apparently to some of my readers, that Jerry left standing my three central points: that cutting taxes on green energy, vehicles, infrastructure and efficiency appears to be 1) much like the broad tax cuts proposed by Cato's supply-siders, and hence, better for the economy than doing nothing; 2) far better than the tax and spend energy initiatives currently on the table (carbon tax-or-trade, subsidy, mandates) which were initially preferred by Jerry over tax cuts; and 3) similar to Cato's tuition tax credit and tax free health saving account proposals, as tax cutting strategies designed to strategically avert a big-gov disaster.

If I am right about these points, then Cato – and many other think tanks on the right as well – should adopt the green energy tax cut proposal because it is philosophically consistent, economically beneficial, can help avert a big-gov disaster, and can help convince progressives (whose identity is evolving) to appreciate the benefits of tax cuts, and draw them away from pitfalls of tax and spend policies.

So I issue an invitation, and a challenge – to Cato, AEI, Heritage, Americans for Tax Reform, Manhattan Institute, Atlas and many others. Let's build this proposal together. Let's use our time in the wilderness to save the wilderness, and capitalism too.

But if you think I am wrong, then let's debate. If you think you can make a better case, then make it. But the truth is, as we have seen here in this debate, that just as cutting taxes beats doing nothing (or tax hikes) on the macro level, it does so on the sector level as well. If you disagree, bring it on.

If you have courage in your convictions, that is.

Now, excuse me, but I need to go talk to some progressives. Let me leave the final word on this debate (for now, at least) to one of my readers, Rachel from Seattle:
"Both you and Jerry Taylor make many wonderful points. I think Taylor is right that doing nothing is better than tax credits, subsidy, carbon tax. But it seems to me that he has misread your proposal, and much of this debate is a misunderstanding. He is reading it as a tax credit proposal, but it is not. Your point is a persuasive insight that I have not heard before, that tax cuts are entirely different from tax credits (or subsidy) in that government is simply getting out of the way vs throwing money at failure. Subsidy probably isn't even the right word for what you are describing. More an unburdening. And you probably are right that it could benefit the whole economy.

Jerry is also right that more debt should be avoided, so if your proposal is to work, it will be critical how it is designed, so that it is at least revenue neutral.

Nice to read a really good debate like this between libertarians."
†Readers may find part I of the debate here, and part II here.


Anonymous said...

I LOVE the idea of green energy tax cuts. It makes sense...

Anonymous said...

Right now, it may be an open question re: directed tax cuts vs directed subsidies.

Both can be effective and positive if they are aimed, as you propose, towards "green" industries that need nurturing in order to develop and grow.

Direct subsidies can bolster private investment so in industries with high capital cost barriers to entry, they might be the most effective.

At this time, trillions of dollars of private wealth have evaporated. The necessary upfront investment from that quarter may be too weak or spread too thin for all the work that needs to be done ASAP.