Why the “Fair” Tax is Bad for Oceans and the Environment

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What is the Fair Tax?

Andy Harris has long styled himself as an anti-tax politician and as a tax reformer. He has stated publicly that he supports the “Fair Tax.” This scheme would replace the current income tax system in the United States with a broad based sales tax of 23%1 (a consumption tax) on practically all goods purchased by Americans. This is a regressive tax that a bi-partisan government panel found would increase the tax burden on the bottom 80% of U.S. households ranked by income. The rationale is simple, because the “Fair Tax” is based purely on purchasing, and necessities (food, transportation, shelter, etc.) consume a larger share of disposable income for families in the bottom 80% income bracket. In addition, it would do away with the existing deductions, exemptions and credits in the current income tax system, which reduces the burden on lower and middle income Americans.

Eliminating the current system of deductions and tax credits has another effect, however; one that would ultimately be harmful to our oceans and the broader environment.

How the “Fair Tax” Would Harm Our Oceans

Nearly everyone is aware of the issue that human generated carbon emissions (CO2) are changing our climate; causing temperatures to rise over time. This is serious stuff, but carbon emissions are causing another crisis that may be even worse – ocean acidification. The scientific community accepts global warming as fact, but since it is only observable over long periods of time, deniers feel able to debate the science. Ocean acidification, on the other hand, is undeniable. It is simple water chemistry, it is observable, and it is happening rapidly.

Acidification occurs when atmospheric CO2 is absorbed by the ocean. The ocean is slightly basic, with an historic pH of around 8.2 (7 is neutral). As CO2 dissolves in seawater, the ocean’s pH declines, becoming more acidic. Over the past 200 years, CO2 absorption has caused the ocean’s pH to decline by .1 (30%). If we continue to produce CO2 at the current rate, the ocean’s pH could drop another .3 units by 2100 – a 150% increase in acidity.

Numerous studies have come out, confirming that this increasing acidification will cause significant declines in marine animals that require calcium carbonate to develop their shells and skeletons. This includes coral reefs, which provide vital habitat for important fisheries, and plankton, which form the base of the food web. Their decline would have far reaching effects and could cause the oceans as we know them to die. Unlike many far off doomsday scenarios, this one is happening today. NOAA’s Richard Feely, an acidification expert, says, “What was projected to occur in the open ocean models by the end of the century, we found is occurring right now along our entire continental shelf as far as we looked.”

Therefore, to save our oceans, we MUST reduce human generated carbon emissions in every way possible. Development of renewable “clean” energy and climate legislation are important actions, but can’t provide a cure on their own. To stop ocean acidification, Americans must simply start consuming less energy. This means that we need to walk and bike more, and live closer to where we work. It also means that we need to drive more fuel efficient, lower emission vehicles and use less energy heating and cooling our homes and workspaces.

Fortunately, our current income tax system provides numerous incentives designed to motivate people to make energy saving investments Currently (though these expire 12/31/2010), you can receive a tax credit for 30% of the cost, up to $1,500 for buying and installing:

  • Biomass Stoves

  • High efficiency Heating, Ventilating, Air Conditioning (HVAC) units

  • Home insulation and products that seal air

  • Roofs (Metal & Asphalt) that meet Energy Star ratings by reflecting a high percentage of the suns rays

  • High efficiency Water Heaters (non-solar)

  • High efficiency Windows & Doors

Another set of tax credits, which don’t expire until 2016, provide for 30% of the cost (with no upper limit) for installing:

  • Geothermal Heat Pumps

  • Small Wind Turbines (Residential)

  • Solar Energy Systems

There are also significant credits available for buying plug in electric vehicles that start at $2,500 and can go up to $7,500. There is no current expiration date on these tax credits

The “Fair Tax” that Andy Harris supports would do away with all of these tax credits. In addition, the “Fair Tax” would increase the cost of investing in any of these energy saving goods by 23%! That’s a double-whammy that would stop most Americans from making the changes that would lower their carbon emissions. It would stop most Americans from making the changes needed to stop ocean acidification and keep our oceans healthy for future generations. This, very simply, is why the “Fair Tax” would be a bad tax for ocean health.

  1. Opponents of the Fair Tax also point out that it is actually a 30% national sales tax, not a 23% tax. This is because it is structured to charge $23 in taxes for each $77 spent. Supporters argue that this is a 23% ratio, because the total cost was $100 dollars, of which, $23 was tax. However, since it is actually $23 taxed for every $77 spent, the effective sales tax rate is $23/$77 or 30%.