Environmental Taxation and the "Double Dividend:" A Reader's Guide

In recent years there has been great interest in the possibility of substituting environmentally motivated or 'green' taxes for ordinary income taxes. Some have suggested that such revenue-neutral reforms might offer a 'double dividend:' not only (1) improve the environment but also (2) reduce certain costs of the tax system. This paper articulates different notions of 'double dividend' and examines the theoretical and empirical evidence for each. It also draws connections between the double dividend issue and principles of optimal environmetal taxation in a second-best setting. A weak double dividend claim is that returning tax revenues through cuts in distortionary taxes leads to cost savings relative to the case where revenues are returned lump sum. This claim is easily defended on theoretical grounds and (thankfully) receives wide support from numerical simulations.The stronger versions contend that revenue-neutral swaps of environmental taxes for ordinary distortionary taxes involve zero or negative gross costs.Analyses numerical results tend to cast doubt on the strong double dividend claim.Yet the theoretical case against the strong form is not air-tight, and numerical dividend claim is dividend claim is rejected (upheld) are related to the conditions where the second-best optimal environmental tax is less than (greater than) the marginal environmental damages.The difficulty of establishing a strong double dividend claim heightens the importance of attending to and evaluating the (environmental) benefits from environmental taxes.

Conflicting perceptions of the status of field biology and identification skills in UK education

There is an enormous degree of engagement between people and the outdoors in the UK; 58% of the adult population of England, about 24 million people, make at least one visit a week to parks, urban green spaces, the countryside or other outdoor destinations. Having nearby green space is important to 52% of adults and 37% of them claim to watch wildlife while outdoors (Natural England 2015a). Children, usually encouraged by adults, also make many visits to the ‘natural’ environment; 70% of children in England, about 7 million, visit natural environments at least once a week (Natural England 2015b). There is, nevertheless, an ongoing thread of opinion and research that suggests that engagement with and knowledge and understanding of the natural environment and knowledge of plants and animals may be decreasing in affluent consumer societies. Thus, Pergams and Zaradic (2008) described a shift away from visits to the outdoors and nature-based recreation in the US and Japan. There is also evidence of widespread decrease in support for natural history in developed economies, despite its huge importance to society (Tewksbury et al. 2015)

Interactions Between State and Federal Climate Change Policies

Federal action addressing climate change is likely to emerge either through new legislation or via the U.S. EPA’s authority under the Clean Air Act. The prospect of federal action raises important questions regarding the interconnections between federal efforts and state-level climate policy developments. In the presence of federal policies, to what extent will state efforts be cost-effective? How does the co-existence of state- and federal-level policies affect the ability of state efforts to achieve emissions reductions? This paper addresses these questions. We find that state-level policy in the presence of a federal policy can be beneficial or problematic, depending on the nature of the overlap between the two systems, the relative stringency of the efforts, and the types of policy instruments engaged. We evaluate a number of arguments that have been made to support state-level climate policy in the presence of federal policies, even when problematic interactions arise.Clean Air Act, climate change, EPA, emissions leakage, federalism, cap-and-trade, carbon tax, regualtion

Status Effects, Public Goods Provision, and the Excess Burden

Most studies of the optimal provision of public goods or the excess burden from taxation assume that individual utility is independent of other individuals' consumption. This paper investigates public good provision and excess burden in a model that allows for interdependence in consumption in the form of status (relative consumption) effects. In the presence of such effects, consumption and labor taxes no longer are pure distortionary taxes but have a corrective tax element that addresses an externality from consumption. As a result, the marginal excess burden of consumption taxes is lower than in the absence of status effects, and will be negative if the consumption tax rate is below the "Pigouvian" rate. Correspondingly, when consumption or labor tax rates are below the Pigouvian rate, the second-best level of public goods provision is above the first-best level, contrary to findings from models without status effects. For plausible functional forms and parameters relating to status effects, the marginal excess burden from existing U.S. labor taxes is substantially lower than in most prior studies, and is negative in some cases.status effects, excess burden, deadweight loss, public goods provision, corrective taxation, consumption externality, first best, second best

Savings Promotion, Investment Promotion, and International Competitiveness

In an open economy, savings- and investment-promoting policies may have very different effects on the capital account and on the viability of export-oriented and import-competing industries. The nature of the effects is often ambiguous in analytical models. This paper employs a simulation model that combines a detailed treatment of industry interactions, attention to adjustment dynamics, and an integrated treatment of current and capital account transactions to investigate these effects in both the short and long run. We focus on the different effects of savings- and investment-promoting U.S. tax policies on the viability of U.S. export industries. We compare results under the assumption of no international capital mobility (and no international asset transactions) with those under the assumption of full international mobility (which assumes no barriers to or costs of such transactions). Within the case of capital mobility, we consider the importance of the degree of international asset substitutability -- the extent to which individuals respond to differences in anticipated rates of return by altering their portfolios. Simulation results show that the impacts on export industries differ fundamentally depending on the degree of international capital mobility. In the absence of such mobility, savings- and investment- promoting policies have similar effects on U.S. export industries, with insubstantial effects in the short run and larger. beneficial long-run effects that reflect increases in the productiveness of the U.S. economy. Once international capital mobility is accounted for, however, the effects of the two policies differ from one another in both the short and long run. Subsidizing saving helps U.S. export industries initially but hurts them over the longer term. The reverse is true for a policy that subsidizes investment. These differences, which are robust across a range of model specifications and parameter assumptions, stem from the very different implications of the two types of policies for the capital account of the balance of payments.