SALON

Tuesday, Jan 8, 2013 9:38 PM UTC

Tax the annoying!

Why some economists want to tax the things we do that negatively affect others

By

Topics: Taxes, economy, pigovian taxes, soda tax, economic crisis, Congress, Fiscal cliff, ,

Tax the annoying!

Could a tax on daily nuisances, like talking during movies, really solve revenue gridlock in Washington? A growing number of bipartisan economists seem to think so.

In a piece for the New York Times today, Adam Davidson of Planet Money asks: Should we tax the things that annoy us? Like, say, traffic jams?

Driving home during the holidays, I found myself trapped in the permanent traffic jam on I-95 near Bridgeport, Conn. In the back seat, my son was screaming. All around, drivers had the menaced, lifeless expressions that people get when they see cars lined up to the horizon. It was enough to make me wish for congestion pricing — a tax paid by drivers to enter crowded areas at peak times. After all, it costs drivers about $16 to enter central London during working hours. A few years ago, it nearly caught on in New York. And on that drive home, I would have happily paid whatever it cost to persuade some other drivers that it wasn’t worth it for them to be on the road.

Instead, we all suffered. Each car added an uncharged burden to every other person. In fact, everyone on the road was doing all sorts of harm to society without paying the cost…. Add up all the cars in all the traffic jams across the country, and it’s clear that drivers are costing hundreds of billions of dollars a year that we don’t pay for.

According to Davidson, one way to make up for these burdens would be to tax them. More specifically, to impose what’s called a Pigovian tax. Named for the early-20th-century British economist Alfred Pigou, it penalizes the things we do that affect others or place a cost on the rest of society. Common examples of the theory in action are congestion pricing — effectively a tax on the traffic that drains gas, emits pollution and inconveniences everyone — and tobacco fees  — which penalize purchasing a substance that can ruin your health or, you know, kill you. You pay for the things that could hurt you or hurt others. It’s kind of like a swear jar, writ large.

And in the wake of the tragedies like the mass shooting at Sandy Hook Elementary, there has been more talk than ever about the social cost of gun ownership. Some economists say that a Pigovian tax on weapons, rather than tougher restrictions, could end political gridlock on gun control.

As you might have already guessed, taxing for the social good is a controversial idea. (Just ask Michael Bloomberg.) As Davidson writes:

There are some obvious problems with their approach. Nobody actually knows the precise cost of any negative externality. (Estimates for the collective impact of a ton of carbon range from $1 to $1,500, for instance, which could lead to all kinds of price disagreements on a Pigovian gas tax.) So Mankiw prefers to focus on simpler factors to deduce externalities. It’s not terribly difficult to figure out how many people drive on a certain road per hour and how much time they lose by being stuck in traffic, he told me. Still, he said, “you’ve got to take your best guess.”

It’s also hard to know where to stop, and economists haven’t been able to offer an objective criteria for deciding what to tax, or by how much. And without clear consensus on what constitutes a social cost, it appears the Pigovian tax utopia might be little more than political pipe dream — at least for now.

Katie McDonough is an assistant editor for Salon, focusing on lifestyle. Follow her on Twitter @kmcdonovgh or email her at kmcdonough@salon.com. More Katie Mcdonough.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • A missing poster hangs on a tree outside the Cleveland home of Amanda Berry Wednesday. Berry and two other women, Michelle Knight and Gina DeJesus, made a daring escape this week after being held captive for more than a decade.
    Credit: AP/Tony Dejak

  • Elvis Rafael Rodriguez and Emir Yasser Yeje offer their best impression of  Eric B. & Rakim. On Thursday, New York prosecutors identified the pair as members of an international gang that robbed $45 million in a matter of hours by hacking into a database of prepaid debit cards and draining ATM machines around the world.
    Credit: AP

  • New Jersey Gov. Chris Christie walks to a podium during the groundbreaking ceremony for the Technology Enhanced Accelerated Learning Center at Essex County Newark Tech in Newark, N.J., Tuesday. Christie made less flattering headlines this week after undergoing a secret stomach surgery to curb his weight.
    Credit: AP/Julio Cortez

  • Workers stand outside the Tung Hai Sweater Ltd. factory in Dhaka, Bangladesh, Thursday after a fire broke out in its 11-story building. Eight people were killed in the blaze.
    Credit: AP/Ismail Ferdous

  • Workers rescue a woman trapped for 17 days in the rubble of a garment factory building in Saver, Bangladesh, Friday. The building's collapse was the worst industrial disaster in the country's history, killing more than 1,000 people.
    Credit: AP

  • Former South Carolina Gov. Mark Sanford gives his victory speech Tuesday in Mt. Pleasant, S.C., after winning back his old congressional seat in the state's first district.
    Credit: AP/Rainier Ehrhardt

  • Jodi Arias reacts in Maricopa Country Superior Court Wednesday after being found guilty of first-degree murder in the gruesome killing of her one-time boyfriend, Travis Alexander. Arias has subsequently said she wants the death penalty, claiming she'd "prefer to die sooner than later."
    Credit: AP/The Arizona Republic/Rob Schumacher

  • Ariel Castro stands for his mug shot Thursday at the Cuyahoga County Corrections Center, where he is being held on $8 million bail. The former bus driver is accused of imprisoning three young women and beating them repeatedly over a period of 10 years.
    Credit: AP/Cuyahoga County

  • Charles Ramsey addresses the media Monday after helping rescue three women held captive in Cleveland for more than a decade. Ramsey's hero portraiture has been complicated by revelations of his own domestic violence record.
    Credit: AP/The Plain Dealer/Scott Shaw

  • Michael B. Donley, Secretary of the Air Force, testifies during a Senate Appropriations Defense Subcommittee hearing on Capitol Hill Wednesday. The military branch was rocked this week after its chief sexual assault prevention officer was charged with sexual battery.
    Credit: AP/Carolyn Kaster

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 12 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations