Using taxes to control behavior

Southside Matt

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Earlier this week, the U.S. House of Representatives passed a “stopgap” bill to prevent a government shutdown at the end of September 30. In this bill, the House also authorizes the suspension of the so-called debt ceiling to authorize the U.S. Treasury to continue to borrow money to pay the country’s bills.

With this measure in place, the House can return to considering the $3.5 trillion budget bill to provide authorization for spending for the upcoming fiscal year, as well as a $1.2 trillion infrastructure spending bill. These bills will allow the U.S. government to continue functioning over the next year, with some programs receiving funding through these bills several years down the road.

One of the sticking points among legislators is how to pay for these measures, though. Not wanting to see some of U.S. President Joe Biden’s key promises removed, House Democrats would rather find ways to pay for these measures as opposed to removing items from the budget. Yet, even within their own party, dissension has developed over simply increasing currently-existing taxes.

Instead, new taxes may be needed in order to provide the funding needed to pass the bills. This includes the resurgence of talks regarding a “carbon use” tax. The carbon tax has long been a method proposed to generate interest in so-called “green energy.” The current proposal seeks to target vehicles fueled by fossil fuels, i.e., gasoline- and diesel-powered cars, trucks, and buses.

The hope of proponents of such a tax is two-fold. First, it would provide funding for the measures including in the spending bills currently being debated in Congress, and possibly for future considerations. Secondly, it would seemingly drive many who currently use fossil-fueled vehicles to convert to those with low- or no-emission capability.

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Government has often used funding or tax incentives to drive behavior among the populace. Education and highway funding are the most often recognized ways in which they do this.

In the beginning, the U.S. government almost freely doles out funding to schools and school districts, and to state and local transportation departments. Once the localities developed these funds into their general operating budgets, the funds became “necessary” for continued operation. With that, the U.S. government began to place terms on the continued delivery of these funds. Schools were directed by the U.S. Department of Education to include or exclude certain criteria to continue receiving the funding. Similarly, transportation departments were instructed to develop laws regarding the requirement of liability insurance, seatbelt use, or speed limits in order to continue receiving funding. In promoting public health, the U.S. government raised taxes on such items as cigarettes and alcohol, on the pretense of trying to reduce addition to each.

As with the examples above, a carbon use tax would be used, even though more immediately than the others, to direct the behavior desired from Washington, D.C. The goal of such a tax would be to direct U.S. consumers to the energy sources desired by those who legislate, regardless of their readiness to be accepted, or the possible negligible effect of such move by consumers.

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Through their bickering about how to pay for the budget currently being debated, Congress is once again considering a way that they can use to drive the behavior of their populace.

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Hailing from the Great State of Texas, South Side Matt monitors government for compliance with the Constitutional values that founded the United States, and works to maintain liberty for all in that spirit. His articles focus on furthering this cause, but also occasionally go "off track" into lighter topics such as cooking, general life and others.

Fort Worth, TX
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