News outlets and the blogosphere are abuzz with reactions to Thursday’s Supreme Court decision that will allow corporations to fund political campaigns. The ruling, which overturns decades of legal precedent and legislation limiting the ability of corporations to influence the outcome of elections, may have broad implications for the political process in the U.S. News of the decision has drawn criticism from both the right and the left, many voicing the opinion that dramatically increased rights for corporations will significantly diminish the ability for individual citizens to have their voices heard.

In his weekly address, President Obama said, “I can’t think of anything more devastating to the public interest,” he said. “The last thing we need to do is hand more influence to the lobbyists in Washington or more power to the special interests to tip the outcome of elections.” Congressman Alan Grayson (FL) has already introduced legislation to combat the policy change. His “Save Our Democracy” Reform Package contains several strong measures, including a 500% excise tax on corporate contributions to political committees, and on corporate expenditures on political advocacy campaigns.

Although some claim that this most recent ruling will have only a limited effect on the political process, the decision certainly re-confirms the doctrine of granting constitutional rights, originally reserved for flesh-and-blood U.S. citizens, to corporate entities, which have held the dubious status of “legal persons” with rights since 1886, when another Supreme Court decision accorded it to them. This unexpected action by the Court re-opens the debate about about the wisdom of affording corporations such rights, and what effects this all has for sustainable business.Profit over people and planet
Readers are likely familiar with the sustainability concept from which TriplePundit derives its name : the “Triple Bottom Line.” Instead of the traditional (single) “bottom line”, referring to business profits as the only real measure of business success, the Triple Bottom-Line measures a successful and sustainable business by three spheres of equal importance: People, Planet and Profit (the “three P’s”). One easy way to tell if a business is unsustainable is the extent to which one of the three P’s, profit, grossly outweighs the other two, in terms of importance and magnitude.

For quite some time now, most businesses have been unsustainable, and most corporations have been pursuing profit for their shareholders above everything else. But this is not simply the result of cultural bias, overly greedy CEOs, or an uninformed public. By allowing corporations the same constitutional rights as human beings, the courts have created a system under which profits must take precedence over people and planet.

The “suicide economy”
In her presentation entitled The Democracy Crisis, Riki Ott, a marine biologist who fought Exxon after the Valdez oil spill, posits that our current form of governance is what she calls a “Corpocracy”, what some might call Corporatism, where unchecked corporate rights inevitably lead to a “suicide economy”, in which the destruction of environmental and social wealth causes huge profits to be made. She cites several examples: The Exxon Valdez oil spill (cleanup boosts Alaska’s GDP), Wars and disasters (boost national GDP), and healthcare (Sick people buy more healthcare, so more sick people equals greater GDP).

Equally protected pillage
In the article Corporatization: An Internal Clash of Civilizations , Ben Manski and John E. Peck write that, “Within the framework of U.S. constitutional law, in which personhood conveys fundamental protections against state action, the dubious doctrine of corporate personhood has allowed corporations to gain constitutional insulation from democratic control of corporate investment in key activities, including electioneering, lobbying, advertising, resource extraction, and manufacturing…. corporations have usurped the legal claim to personhood, while remaining free of the accompanying moral obligations or physical limitations of natural persons”

Because the Supreme Court has been slowly taking away the States’ power over corporations (put in place specifically because many of our founding fathers feared the potential abuse of unchecked corporate power) the situation keeps getting worse and worse. The following are just a few examples of protections that are currently the right of corporations, and their sustainability impacts, from the article “Corporate Personhood and the “Right” to Harm the Environment”:

• Fourth Amendment, “The right of the people to be secure. . . against unreasonable searches and seizures. . .”
  “Under many circumstances, corporations have the right to “shut the door” on government inspectors who lack a search warrant. The resulting delay may be enough for a company to cover up signs of wrongdoing. Even if evidence is collected under a search warrant, there is no guarantee that it will hold up in court.”
• The Fifth Amendment, “. . . nor shall any person. . .be deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use, without just compensation.”
  “Corporations have the right to challenge governmental actions that protect the environment by claiming they are “takings” of their property rights. Further, the government may be required to provide monetary compensation for any consequent reduction in property value, even intangible property value such as lost potential profits.” Corporations even have the right to “not speak”, so as to not incriminate themselves!
• The 14th Amendment, “. . . nor shall any State . . . deny to any person within its jurisdiction the equal protection of the laws.”
  “By using the cry of “equal protection” to open the courts to them, corporations can evade, if not overturn, regulations while conducting business as usual.”

And finally,

• The First Amendment, “. . . no law. . . abridging the freedom of speech. . .”
  “The First Amendment right to free speech has been broadened by the courts to allow corporations to give campaign contributions, lobby legislators, run advertisements that support their interests, exercise the right not to speak, and paint their activities as ‘green.’ “

Given that the Supreme Court had previously established that corporations were persons due 14th Amendment rights, they really had no choice but to decide that corporate speech could not be restricted. To do otherwise would be to invalidate both the equal protections of the 14th Amendment and the guarantee to free speech of the FIrst Amendment. To truly solve this problem, the notion of corporate personhood must be turned back to its original definition, which allowed corporations simply to make contracts, own property, and to sue or be sued.

Power to the people
Americans must re-assert that Constitutional rights are the rights of living persons only, and do not apply to “legal fictions”. Americans must also re-establish the absolute rights of the States over Corporations, meaning that States could revoke corporate charters, levy differential taxes and revoke the right of corporations to have jury trials, saving years of litigation and untold millions of taxpayer dollars.

To conclude, I would like to point out what is perhaps the most appalling aspect of this entire topic. While individual civil rights, such as women’s and minority rights, were gained at the cost of many years, lives, hard work and sacrifice, corporate rights were gained simply through Federal court decisions, with no public debate whatsoever! Oddly enough, this prospect was foreseen by Thomas Jefferson, and, in 1821, and he was quoted as saying, “The Engine of consolidation will be the Federal judiciary; the two other branches the corrupting and corrupted instruments.”

I think it is about time that we stop proving Mr. Jefferson right.

(If you are interested in learning more about this topic, I highly recommend reading the linked articles, which provide many and detailed examples, much too lengthy to be included here.)

Resources:

• Citizens United, Majority Opinion [via movetoamend.org]
• Citizens United, Dissenting Opinion [via movetoamend.org]
  
• Citizens United, Other Justices’ Dissents or Concurrences [via movetoamend.org]
  
• Alan Greyson “Save Our Democracy” petition
• Program on Corporations, Law and Democracy [poclad.org]
• Move to Amend/Campaign to Legalize Democracy
• Corporatization: An Internal Clash of Civilizations
• “Corporate Personhood and the “Right” to Harm the Environment”
  
• Proposed Constitutional Amendments to revoke corporate constitutional “rights” [reclaimdemocracy.org]
• Keith Olbermann Special Comment On Supreme Court Ruling – Part 1
• Keith Olbermann Special Comment On Supreme Court Ruling – Part 2

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This article originally appeared on TriplePundit and is reprinted here thanks to 3P’s Creative Commons Attribution 3.0 license. You can find out more about Creative Commons licensing here.on twitter.

In the glorious Past Before Television, adventurous men and women gained fame and fortune by testing their skills in competitions designed to expand the limits of human knowledge and innovation. Several organizations are bringing back this kind of “innovation prize” in a big way, with competitions designed to solve some of humanity’s greatest challenges, and expand its horizons beyond terrestrial limits.

One of the greatest scientific breakthroughs in history was the result of a prize offered by the British government in the 18th century. At that time, many ships were being lost due to the inaccuracies involved in calculating their longitude at sea. The previous method, dead reckoning, introduced greater errors the farther the ship got from a known point, usually ending in loss of life and heated discussions about the velocity of various types of swallows. The British Parliament offered the modern equivalent of $4.56 million for a solution to the Longitude Problem.

One of the potential solutions to the problem required invention of a marine chronometer of such high accuracy that even Sir Issac Newton doubted that it could be created. But, in 1730, clockmaker John Harrison set himself to the task, and effectively solved the multiple problems of corrosion, temperature, humidity and durability within 5 years, (although it took him another thirty to collect his prize) a task which has been compared to the landing of men on the moon in the 1960s.

Other famous historical prize winners have included Nicolas Appert, who answered Napoleon’s challenge to invent a new food preservation method; Charles Lindbergh, who won $25,000 for flying solo across the Atlantic, Louis Pasteur, for his work in physiology; and a team from IBM, whose chess computer, Deep Blue, was the first to beat a human being, chess champion Gary Kasparov.

More recently, the X-Prize Foundation, the brainchild of serial entrepreneur Peter Diamandis, has been offerring prizes in the $10 million to $30 million range for solutions to big challenges in areas like space exploration, genomics and energy. Mr. Diamandis believe that by offerring huge prizes for people to take extraordinary risks, he can harness our competitive nature and drive major breakthroughs just where we need them most. His most famous venture to date, the Ansari X-Prize, awarded $10 million to aviator Burt Rutan’s team for being the first to achieve a private suborbital space flight, and then repeating the task two weeks later. The success of the Ansari prize rekindled public interest in space flight, and has lead to the numerous successors.

Mr. Diamandis envisions a new model for philanthropy, with a return on investment of 10x to 40x the amount invested (the prize money). Unlike traditional philanthropy or venture capital, the x-prize model doesn’t require the investor to bet his entire investment on the winner to get a return on his investment.

The X-Prize Foundation is currently sponsoring the Progressive Automotive X-Prize, for the fastest vehicle with 100mpg efficiency and a 200-mile range, the Archon X-Prize for Genomics for the first team that can build a device and use it to sequence 100 human genomes within 10 days or less for under $10,000, and the Google Lunar X-Prize for the first privately-funded team to safely land a robot on the surface of the Moon, travel 500 meters over the lunar surface, and send images and data back to the Earth.

The company envisions potential future competitions may include an entire suite of prizes dedicated to energy and environment, a Village Utility X-Prize, leveraging technology-based innovation to develop more effective ways to deliver power, water and connectivity to communities in need in the developing world, and life sciences X-prizes in TB DIagnostics and improving healthcare in the U.S.

But prize competitions are not limited to the X-Prize foundation. The Defense Advance Research Projects Agency (DARPA), has sponsored several competitions, including the DARPA Grand Challenge (robot vehicles in the desert), the DARPA Urban Challenge (robot vehicles in the city) and the DARPA Balloon Challenge (wide-area team building using the Internet). NASA sponsors its Centennial Challenges including the Astronaut Glove, Power Beaming and Lunar Lander Challenges and also co-sponsors the Space Elevator Games.

More environmentally-focused competitions about as well. The DOE sponsors the L-Prize and H-Prize for innovations in lighting and hydrogen technologies. The Smart Gear Competition, developed by the World Wildlife Federation seeks “to inspire and reward practical, innovative fishing gear designs that reduce bycatch.” Of course, no article about innovation competitions would be complete without mentioning the DOE’s Solar Decathalon, where college and university teams compete to design solar-powered houses, or the upcoming American Solar Challenge, a cross-country race featuring solar-powered cars.

Further Reading:

Peter Diamandis: the joy of taking risks (newscientist.org)

An Interview with Peter Diamandis, Founder of X PRIZE: On Colonizing Space and Reinventing the Philanthropy Model (opportunitygreen.org)

Video: SpaceShipOne: Prize Flight #2 (youtube.com)

Electric Vehicles: The News Keeps Coming (triplepundit.com)

Marc Gunther: The Strange Power of Prizes (marcgunther.com)

Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time (Amazon.com)

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This article originally appeared on TriplePundit and is reprinted here thanks to 3P’s Creative Commons Attribution 3.0 license. You can find out more about Creative Commons licensing here.

…a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck… But lately he has begun emerging as perhaps the most prescient big-picture thinker about what, exactly, we are going through…Minsky was one economist who saw what was coming. He predicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy.

Minsky basically believed that the conservative fiscal stance which comes in the wake of a financial collapse, such as the Great Depression, would inevitably sow the seeds for the next crisis decades down the road. The main ingredients are time and short human memories, “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.” The article compares Minsky’s view to the one held by mainstream economics, that capitalism is self-regulating and self-stabilizing, known as the Neoclassical Synthesis.

Having a Minsky Moment

Minsky’s theory, known as the “Financial Instability Hypothesis,” works like this: in the wake of a financial collapse, the remaining lending institutions will see to take on less risk and revert to extremely conservative practices, which results in everything running smoothly for a while. As time goes by, and people are farther and farther removed from the source event, they are more and more willing to take on risk. Ultimately, this leads to greater and greater speculation, as more and more risky borrowers enter the market, what Minsky called a “euphoric economy”.

The end comes when the riskiest of borrowers enter the market, those whose borrowing can only be paid for with more borrowing, essentially a Ponzi scheme. Once the economy enters this fragile state, it only takes one small incident to topple the whole house of cards (This moment is referred to as the “Minsky Moment”), as everyone tries to shed risk and the cycle basically starts again.

If any of this sounds eerily familiar, that’s because it is exactly what happened this time.

Damage Control

Minsky suggested that it may be possible to mitigate some of the damage by implementing some policies that you also may be familiar with. The first would be a monetary policy in which the Fed would serve as the lender of last resort, in order to stop the bleeding and keep credit flowing. This policy was not implemented in time during the Great Depression and may be what led to it being so long and so deep. It has been implemented widely during the current fiscal crisis, although it is too soon to tell if has worked, although the signs are promising.

The second of Minsky’s policies was that the government should also act as the “employer of last resort”, employing everyone in need of a job at some minimum wage, and putting them to work on socially beneficial task. A form of this policy was used by Teddy Roosevelt and others during the Great Depression, and resulted in much of the infrastructure we currently use, such as bridges, highways and national parks. However, this policy has not been implemented by our current and recent leaders, which brings me to the real point of this article.

I find it interesting how easily the our current government, whether Democrat or Republican, found it to implement one part of Minsky’s plan, being the lender of last resort for financial institutions, yet finds it unpalatable to implement the other half, i.e. putting people to work. It is odd how people like Fed Chairman Ben “Helicopter” Bernake and President Obama have so eagerly adopted only the part of the plan which benefits business and financial institutions.

Odd how one is called “socialism” while the other is called “good business”. I believe that we may be leaning towards the form of government known as corporatism. (Some would call this a form of fascism, although not in the nationalistic sense.)

Too Many Clunkers

Our government seems to be much more willing to put corporations first, by funelling money to one pork project or another. Cash for Clunkers is a perfect example. While it did provide a short-term boost to auto dealers and auto manufacturers, it neglected the fact that people without jobs can’t afford to buy a car at any price, and the program ended up selling a lot of second and third cars. The people at the bottom were left out again. Perhaps the focus should be on putting people to work first, and if it is useful work, so much the better. I can’t even begin to imagine how many people we could put to work at a minimum wage for the amount of money that has been spent on bailing out large corporations.

The thing is, we need both. Corporations need credit to make things, and individuals need jobs so that they can buy what the companies make. As Henry Ford figured out, you can’t have one without the other. Perhaps a system that is skewed solely towards those with money and power, and ignores those without, is more aristocracy than meritocracy, and something that should be avoided.

Your Opinion

What do you think? Was Minsky right? Are we focusing too much on bailing out companies and ignoring the little guy? Please post your opinion in the comments.

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This article originally appeared on TriplePundit and is reprinted here thanks to 3P’s Creative Commons Attribution 3.0 license. You can find out more about Creative Commons licensing here.

It’s amazing how cheap. diposable products and waste have crept into even our oldest traditions. It’s insidious. I’m talking about the commencement ceremonies that are happening at every high school, college and university at this time of year. Even my own graduation, a ceremony meant to celebrate the achievement of people dedicated to sustainability and building a world that works for future generations, was rife with single-use items that were never intended to be that way.

I don’t blame the institutions, which, by necessity, are obligated to provide their students and their loved ones with a ceremony befitting of their hard work and investments in time and money. I don’t blame the students, faculty, family and staff who have these expectations either. We certainly should not be in the business of sacrificing the things that mean the most to us in the process of achieving a sustainable world.

It all comes down to a matter of perceived cost. Most of the items currently used are very cheaply made because graduation is seen as a very rare occurrence: why spend a lot of money on something that will only happen once a year for the institution, and only a handful of times for the graduate?

Not to mention the fact that the regalia is not exactly everyday wear. Even a bridesmaid’s dress might be remade into a cocktail dress that might get worn after the big day, but graduation gowns are never seen outside of a graduation ceremony.

So…how do we make graduation more sustainable?

I can see two possible ways to go with this: convince institutions to start buying well-made, durable items that are reused year after year, or convince companies to provide these types of items on a rental basis. The most obvious examples:

- Caps & Gowns: While these wizard robes used to be de rigeur for the academic set (so they could stay warm in their drafty halls of knowledge), they are currently never worn outside commencement ceremonies. The most widely-used models are made of nylon taffeta that will rip if you look at it too closely.

I would suggest that colleges purchase super high quality robes that can be used year after year, much in the same way that schools purchase marching band uniforms. Trust me when I tell you from personal experience that band uniforms can be reused for decades, and rarely get replaced except when they go out of fashion. Graduation attire isn’t going out of style any time soon, and it only gets worn once a year.

Making them out of organic materials is icing on the cake.

- Diploma Folios: If you tried to just hand out diplomas without putting them in something, they probably wouldn’t make it to the cocktail hour without getting folded, spindled or mutilated. Rolling the diploma up with a ribbon might be a nice way to go, but I suspect that it’s a logistical nightmare (It’s pretty easy to open up a folio and check to make sure the name is correct, right before you hand it to someone…hard to do if it’s wrapped up).

I think that most people are going to take the diploma right out of the folder and put it into a frame on their wall. There are two ways to deal with this: make the folio out of sustainable and compostable materials, or make it durable enough to last for years, and give the students a way to send it back to the college to be reused. Including a postage-paid return envelope is a great way to do this.

- Tassels and Hoods: Many people like to keep these items as mementos. The best way to deal with these is to make them out of organic and sustainable materials. If they are also made to be durable, graduates could be given the option to turn them in to be reused.

The biggest hurdle to adoption of durable and reusable graduation attire will be the cost. The cost of investing in high-quality reusables is sure to be much greater than disposables. It would need to be borne by either the school or the graduates. However, The costs will ultimately be much lower if you consider them over time. While no-one wants to make getting an education any more expensive, I would suggest that we are already paying these costs. We are paying for these conveniences with degradation to our environment and with our children’s futures, instead of in dollars and cents.

This is hardly the message that you want to send with a commencement ceremony.

But, what about the benefits? Besides the obvious environmental benefits, which are huge, there are many other benefits to this approach: ; colleges would save time and money by not having to orchestrate, order and ship new attire every year; students will be able to celebrate their achievement in high-quality clothing befitting the moment, instead of something that feels like it was purchased from a dollar store; there may even be a nostalgia factor of wearing a robe that been worn by others before you.

We should, however use these high-profile opportunities to show what can be achieved, with a little effort. Even the current taffeta caps and gowns are reusable for several occasions, and diploma folios would probably last many more times. To that end, I would like to call for a nationwide effort to begin recycling commencement attire.

If you have recently graduated, please consider returning your graduation attire to your college and university. Dont’ forget to send them the diploma folio once you’ve hung up your pride and joy. Be sure to tell them why you are doing it. If you are feeling really motivated, organize a drive amongst your graduating class to collect up these items and return them en masse, making it easier and cheaper for everyone while providing a little extra motivation.

Oh…I almost forgot…congratulations on graduating! What’s your opinion on all of this?

This graph shows exactly what 3.6 million jobs lost in 6 months looks like. It really is something, isn’t it? [via The Gavel]

The following video describes how an electronic “run on banks” almost collapsed the ENTIRE WORLD ECONOMY in just under 5 hours, if it wasn’t for fast action by the Fed. If this isn’t a prime example of a “Black Swan” or unintended consequence of complexity, I don’t know what is. [via BoingBoing]

Earth2Tech is reporting that a proposal to give drivers up to $10,000 in incentives in return for trading in their old car for an energy-efficient one has been withdrawn from the stimulus package. Unfortunately, this item fell victim to efforts to reduce the size of the stimulus package.

When it comes to government intervention, I am very much in favor of this kind of incentive, which gives people an economic reason to do something that is good for both them and for the country. I generally prefer this kind of incentive, because it is direct, measurable, fast, and represents a positive incentive instead of a punishment. It would both stimulate the economy, by getting people to buy new cars, while speeding up the process of taking old junkers off of the road.

I hope that this item is reconsidered in the future, especially if it is tied to very strict mileage requirements on the new vehicles that can be purchased with the rebate.

The author of this article points out that Steven Levitt, author of Freakonomics, pointed out a major flaw in the proposal:

Leavitt brings up an interesting point, although I can see two sides to this argument. On the one hand, you can simply change the cutoff to be based on the gas mileage of the car being traded in, not its age. The goal is to reduce the overall emissions of the U.S. fleet, so who cares if it is a 2-year old Hummer or a 10-year old Ford?

Now, on the other hand, you might want to consider the total energy (and, thus, emissions) embodied in the production AND usage of the vehicle over its lifetime. In this case, I don’t have a problem with a 10 or 15 year cutoff. If you accept this model, it’s probably not a bad thing to encourage people to keep their cars for their useful lifetimes, and thus minimizing the overall impact of the car.

Personally, I would choose the MPG option over the life cycle option, since reducing future emissions is probably more critical to solving our current dilemma.

Tags: sustainability, business, green, renewable energy, cars, auto stimulus black swan

This video is about as good a place as any to begin a blog on sustainability and lifehacks.  One could certainly call Natural Capitalism a lifehack on a grand scale.

Hunter Lovins is one of my esteemed professors at the Presidio School of Management, where I am currently a 2nd semester student, pursuing an MBA degree in Sustainable Management.

This really caught my attention, because I have been a long-time advocate of the FairTax legislation, which would replace the Federal income tax and payroll taxes, and many other federal taxes with a consumption tax. It occurred to me that enacting the FairTax would, in addition to a myriad of other benefits, solve one piece of the puzzle, namely untaxing labor and making labor more attractive in the marketplace. I also realized that there are a number of other benefits of the FairTax which apply to sustainability, such as encouraging savings and discouraging consumption, encouraging purchases of used items (re-use), encouraging investment in education, and creating a safety net for the poor. In the remainder of this article, I will explain how the FairTax can be a positive tool in the effort to make the U.S. more sustainable.

I would like to start by stating a couple of things straight away: I am currently a volunteer community coordinator for American for Fair Taxation, the organization whose mission it is to get the FairTax bill passed, and, as such, I would not consider myself a disinterested observer by any means. I am very passionate about changing our tax system.

Secondly, I do not believe that the FairTax is some “magic bullet” that can solve all sustainability problems. I firmly believe that enacting the FairTax is the first step in moving towards a tax system that works positively for people and the environment. It will mostly affect labor and consumption. I believe that the next step would be to start implementing taxes on natural capital, so-called “eco-taxes“, so that the price of finished goods more accurately reflects their real cost to society and the environment. If eco-taxes were done right, the FairTax rate could be gradually reduced as these new systems are implemented, and the final price of goods could stay the same, and would accurately reflect their “true” price.

I also want to mention that the FairTax does not try to address waste in government spending. (It only removes the waste from income tax collection) It is designed to be “revenue-neutral”, so that it exactly replaces the current levels of government spending. What this means is that under the new system, all government expenditures would be fully funded, including Social Security and Medicare. While these are important issues that need to be addressed, the writers of the legislation felt that they would overly complicate things, and make it impossible to otherwise implement the needed tax reforms.

The FairTax legislation is a nonpartisan effort to create a simple, fair and transparent tax system which does not favor any particular ideology. Here is a particularly good explanation of the FairTax from Wikipedia.org:

The FairTax (H.R.25/S.1025) is a proposal in the United States Congress for changing tax laws to replace the Internal Revenue Service (IRS) and all federal income taxes (including AMT), payroll taxes (including Social Security and Medicare taxes), corporate taxes, capital gains taxes, gift taxes, and estate taxes with a national retail sales tax, to be levied once at the point of purchase on all new goods and services. The proposal also calls for a monthly tax rebate to households of citizens and legal resident aliens, to “untax” purchases up to the poverty level. The sales tax rate, as defined in the legislation, is 23% of the total register price (23¢ of every $1 — calculated the same way as income taxes), which is comparable to a 30% traditional state sales tax (30¢ on top of every $1). Because the U.S. tax system has a hidden effect on prices, it is expected that moving to the FairTax would decrease production costs from the removal of business taxes and compliance costs, which is predicted to offset a portion of the FairTax effect on prices.

Due to the rebate, the effective tax rate is progressive on consumption and could result in a tax burden of zero or less…the plan’s supporters argue that it would increase purchasing power, and decrease tax burdens by broadening the tax base and effectively taxing wealth. Many mainstream economists and tax experts believe consumption taxes, such as the FairTax, would have a positive impact on savings and investment (not taxed), ease of tax compliance, increased economic growth, incentives for international business to locate in the U.S., and increased U.S. international competitiveness (border tax adjustment in global trade).

The FairTax bill was first introduced into Congress in 1999, and has been re-introduced in each successive congress, substantially unaltered. The FairTax has been the most successful tax reform legislation to date, garnering 56 co-sponsors in the 108th Congress, 61 in the 109th, and 64 in the 110th Congress (2007). By comparison, the Freedom Flat Tax bill, has only 4 cosponsors in the 110th Congress. Very recently, several 2008 presidential candidates have expressed support for the FairTax.

I am sure you are painfully aware of the many problems with the IRS and the income and payroll tax system in general, so I will not bore you with a lengthy discussion of those. This article give a good overview of the costs of compliance inherent in the current system and this article talks about the origins of the income tax.
The greatest benefits of moving away from an income and payroll tax based system lie in the effects on wage earners. Under the current system, employees have income and payroll taxes (social security and medicare) deducted from their paychecks, before they get a chance to decide what to do with that money. In addition, employers pay a share of payroll taxes which is equal to the amount that employees pay. Since this costs is borne fully by the employer, this essentially a tax on labor. The effects of a labor tax are decreased employment, decreased pay and increased prices on goods. It should also be noted that payroll taxes disproportionately affect low- and middle- income workers, because the tax is only applied to the first $90,000 of wages. By eliminating the income and payroll taxes, real wages will increase, employment will increase as the cost of labor goes down, and consequently, the price of goods will decrease as well.

My personally favorite benefit of the FairTax is having more control over how much tax I pay and how much I can save. By eliminating the income and payroll taxes, and enacting a sales tax, I now have taken back control of my money from the government, who currently considers it “their” money first. Now, I don’t have to worry about 401(k)s, medical savings plans, etc., because everything is now pre-tax!! Now, if I want to save my money to buy a house, I can save as much as I want, and not have to pay any tax on it, at least until I buy the house (if it’s used, I won’t have to pay any tax…more on that later). If I simply want to pay less taxes, I can endeavor to purchase less. So, you can see how keeping the income tax in place is discouraging people to save, which, in turn, encourages them to consume more, and we all know that consuming more is a bad thing.

Encouraging people to reuse products instead of purchasing new products is a great way to reduce waste and also resource consumption and emissions, because reuse removes the demand for a new product and also keeps a previous product from being disposed of. By only taxing new goods, and only taxing them once at the initial point of purchase, the FairTax will create a new incentive for consumers to purchase used goods, including houses which are not new construction.

When many people think about a sales tax, they assume that the sales tax will not be progressive, and will negatively affect the poor, since poor people spend a much higher percentage of their income on necessities. This is not so under the FairTax plan, because each legal taxpayer in the U.S. will receive a monthly check, called the “prebate”, for the amount of tax they would pay on purchases up to the poverty level of spending. This would protect all families from paying sales tax on the necessities of life. Thus, a couple with two children receives a prebate of $6,297 per year, allowing them to consume $27,380 free of tax and reducing the effective tax rate on a family spending $54,760 to 11.5 percent. In contrast, all families today, even the poor, pay 15.3 percent in payroll taxes. The FairTax is the only tax reform plan that entirely eliminates taxes for the poor because it is the only tax reform plan that repeals the high and regressive payroll tax. In addition, taxpayers who earn well below the poverty level wage will see their effective tax rate drop, up to the point where they actually have a negative tax rate. This is commonly known as creating a “floor” for the worst off in our society, such as homeless persons, by providing them with a basic level of income.

The FairTax considers education to be an investment, and, as such, is not taxed. This makes it much easier for people to afford to pay for college, and, with the previously mentioned incentive to save, helps them to save for college as well. In creating a sustainable world, we want to begin to use people more instead of natural resources, and I can think of no better way to do this than by having more people go to college.

On a final note, elimination of the IRS and the income tax, and implementing a consumption tax will have one very direct environmental impact: a massive reduction in the use of paper. Reportedly, the IRS sends out 8 billion pages of forms and instructions each year. Laid end to end, they would stretch 28 times around the earth. Nearly 300,000 trees are cut down yearly to produce the paper for all the IRS forms and instructions. A consumption tax, administered by the states, has a much smaller bureaucracy and a greatly reduced need for paper consumption.

There are so many benefits to a consumption tax over an income tax, and so many detriments to the IRS and our current tax system that I could go on indefinitely, which, I’m sure would bore the pants off of you! You may also find that a lot of my points may bring up more questions than they answer. I will gladly answer any and all questions which you may have.

I find that the income tax challenge seems as insurmountable as the sustainability challenge. I would like to put forth that they are actually the same struggle, the struggle for a fair and equitable world, with an economy that takes into account the real costs of production to the world when it prices its goods.

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This article originally appeared on TriplePundit and is reprinted here thanks to 3P’s Creative Commons Attribution 3.0 license. You can find out more about Creative Commons licensing here.

While some try to find ways to reduce their impact by changing lightbulbs, choosing better cars or using cloth bags, there are others of us on this planet who appear to be on a mission to single-handedly use up all the resources we’re trying to save via ridiculous consumption.

I had previously mused to some collegues about the potential impact of a single resident of my community, who owns this gigantic house, complete with Llamas and Emus. I had asked if it makes any sense for 100 people to conserve resources when one individual can so easily use up those resources himself. I certainly was not prepared for this news story, about the righest man in India, who is building himself a 60-story single-family house!

While the world has a long history of conspicuous consumption by the wealthy, the accumulation of massive amounts of wealth which is possible today gives a few individuals the ability to make impacts equals to thousands of private citizens, or even equal to one small corporation.

While the negative impacts of private jets, gigantic private yachts, massive houses and gated communities may be huge, are they offset by the equally huge impacts of wealthy citizens who are doing the right thing, and using their money to make a positive difference?

I wonder what, if anything, can de done about this. I do not personally believe that wealthy people are bad or evil. I would certainly like to be one myself. But I wonder if our instinct to accumulate and use resources as quickly as possible will win out over our intellectual battle to save our species for the long haul.

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This article originally appeared on TriplePundit and is reprinted here thanks to 3P’s Creative Commons Attribution 3.0 license. You can find out more about Creative Commons licensing here.