Monday, April 23, 2007

Congestion Tax

User pays

What would make Mayor Bloomberg's idea (taken after what is seen as the success in London) of an $8 per car congestion tax a good idea would be if he lowered the income tax or some other general tax that everyone pays. E.g., yes let the people who drive and use the roads pay for it, but then lower the general tax everyone pays now that some of the taxes are more specific. This is, in general, a good idea.

Same thing with consumption tax. Get rid of the income tax - as you want to encourage income - and replace it with a consumption tax (with of course rebates to poor people whose consumption as a percentage of income is higher than those of the middle class). Taxing income means less of it which mean less growth and investment which means less ways for the poor and unfortunate to become less poor and unfortunate. Just like if you tax traffic in NYC you'll have less of it.

Bloomberg has other ideas too, 127 of them he rolled out on Earth Day e.g. let's make NY green. I wonder what our taxes will look like by the time he's done ? But then again, they couldnt get much worse ! There are always trade-offs to everything; that's an economic law.