They also argue that until they reach the basic standard of living they enjoy throughout Europe and the United States, they should be exempt from such taxes or regulations. In response, countries like the United States have resisted both emissions schemes that would exempt nations with which the United States competes in trade and pay for climate repairs or resilience support. Countries in between, including Brazil, Russia, Indonesia, and China (the BRIC countries, which have significant economies, relatively high emissions levels, and/or carbon sequestering resources such as forests) point to the United States as the key outlier on of emissions. . Some have argued that a low-level, near-global carbon tax could be implemented almost universally, could have a huge impact in moving away from carbon dependency, and would not be unduly onerous. However, the 700 million people who live in extreme poverty, lack basic necessities, and are suffering the most from climate change are also the ones who would feel disproportionate impacts from such a tax, given limited state administrative capacity to offset those impacts in many of these countries.
In their new paper, Clint Wallace and Shelley Welton propose an alternative solution (at least for the moment): tax luxury emissions. Luxury emissions are those associated with private jets, mega-SUVs, yachts, multiple mansions, and other high-carbon artifacts and activities associated with the lifestyles of the rich and famous. They argue that luxury carbon is more susceptible to a carbon tax as a matter of morality, social impact, and policy. First, the free spending and externalized damages of the ultra-rich are morally repugnant. For example, they report that about a year ago Kim Kardashian took his private jet to cover a distance of 35 miles. During the 17-minute flight, the plane emitted around two tons of carbon, more than the annual emissions per person of residents in 85 countries. While US household emissions have decreased by an average of 16% over the last twenty years, the emissions of the top 1% have increased by 23% and those of the top 0.1% by 50%. In view of the dire need of the aforementioned 700 million, this is excessive. Second, they point out that many of the super-rich also have an outsized impact on society through their vocations as “influencers” via social media and other trend-setting accounts. Curbing your outsized spending might be more beneficial as a result of your influence. Also, a fancy carbon tax will have its own signaling impacts; Like cigarette taxes and anti-smoking campaigns, the government can deter excessive consumption through a fancy carbon tax. Finally, by targeting high-end goods, they argue that politicians can undermine the fossil fuel industry’s scaremongering campaigns that warn middle-class consumers that the government is “coming for” their hamburgers and cars. They also come to assume that a fancy carbon tax can activate class politics. against conspicuous consumption by the ultra-rich. However, the campaign of the leisure class to defeat the wealth tax (which currently affects only about 1,900 families in the US per year) characterizing it as an “inheritance tax” should arouse some skepticism in this regard.
While his arguments for the moral, political and social prominence of a luxury carbon tax may be largely unassailable, the key challenge will be implementation. Wallace and Welton are looking at an excise tax on high-emissions luxury goods such as private jets, superyachts, supercars or mega-SUVs, and multiple mega-mansions as their primary design choice. Excise taxes on goods raise issues of tax incidence and tax avoidance. First, who pays the luxury taxes? Currently, most wealthy consumers of luxury goods can escape or at least share the burden of sales tax on such items through negotiations with sellers. Would an excise tax on luxury items be so easily avoided or changed? Second, while you may be able to tax retailers, how will private transfers from non-commercial sellers be tracked? Just as tariffs on goods can be avoided by shipping them through other countries or sending the parts to be assembled in another nation, luxury goods can be bought and sold through private channels, secondary markets, or even (gasp! !) secondhand.
Third, taxes have behavioral effects. For any item or group of items taxed, consumption may shift to other luxury goods. A luxury tax implemented in Indonesia produced a rebound in motor vehicle sales; the opposite switch from SUVs to diamonds could easily happen. Also, as we broaden the definition of luxury goods, we begin to reach into the spending of middle-class consumers, something Wallace and Welton seek to avoid for the reasons outlined above. In addition, spending on luxury items may not be controlled as easily by taxing expensive items. While minimalism, the notions that quality is better than quantity and that less is more, may have taken hold in some quarters, for many of the ultra-rich, more is more. Ask Jerry Seinfeld, Jay Leno and Ralph Lauren about their car collections.
Fourth, the ultra-rich are also exceptionally mobile and therefore in the best position to negotiate prices internationally. For goods that are themselves modes of transport, you have an additional problem. What will prevent an aircraft or vehicle from being purchased elsewhere and brought into the country in the normal way? How difficult will it be to uniquely tax the goods upon importation or arrival? Furthermore, as Berkeley professor Gabriel Zucman has shown, in The hidden wealth of nations, the ultra-rich can hijack their profits in tax havens around the world. Likewise, Oxford professor Tsilly Dagan regrets that, in an age of hypermobility and fragmentation (where the ultra-rich enjoy the public goods of one nation state, the taxes of another, and political influence anywhere they choose) achieve fiscal and distributive justice it is a tense undertaking. Some supercapitalists are not just retreating to their private islands, but building ocean colonies as sovereign nations floating in international waters. Can we really imagine that we will be able to bend the consumption curve of this set? Finally, it is precisely because these kinds of people are influential people that the concept of luxury is so fluid. A decade ago, could anyone imagine that celebrities would market candles based on the scent of their body parts? Who knows what the next big status symbol will be?
While all of these concerns need to be addressed, they may not be insurmountable for a luxury emissions tax. The Tesla nation has been built on the idea that, with substantial tax subsidies, luxury can sell action against climate change. By choosing climate-friendly alternatives, the rich and famous could potentially serve as ambassadors for a new carbon-neutral era on Earth. Until then, those of us simultaneously occupying roles as climate advocates and hidden Robin Leach fanatics can fantasize about a revival of his decade-old program in the form of “Eco-Conscious, Carbon-Free Lifestyles.” Until then, I say goodbye in the hope that she will refrain from “cravings for champagne and dreams of caviar …”
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