Al Gore’s testimony before the House Energy and Commerce Committee on global warming this week was an interesting spectacle. It’s hardly surprising that the Republicans on the panel spent more time panning Al Gore than substantively discussing the issues. Nor is it surprising that the Democrats didn’t offer much in the way of probing questions. It is unfortunate that, in the political shuffle, the best idea to have surfaced in a long while regarding management of carbon emissions was buried, and didn’t receive much attention.

In brief, Al Gore has come up with a way to reduce carbon emissions, increase wages and employment, and maintain present government tax revenues, all in one fell swoop, without raising taxes a single penny. How can this be possible?

All Great Ideas are Simple

The truth is that the idea is so simple, elegant, fair, and feasible, that it’s extraordinary that it has received so little attention. Al Gore has proposed a carbon emissions tax swap. Specifically, levy a tax on carbon emissions, and reduce the payroll tax by the same amount. We are no fan of taxes of any variety, but under this plan, the overall tax rate would remain unchanged, as would government revenues. The taxes would merely be shifted form one place to another, and in a way that would be of great benefit to the economy as a whole.

Few Americans know what an enormous and unfair burden the payroll tax is. It is regressive, affecting only about the first $90,000 of income. Thus wealthier individuals pay a much smaller percentage of their incomes. But the truly insidious aspect of it is the way it is divided. Specifically, employers pay half of the tax. Before you liberals out there start pontificating about sticking it to the evil corporations, just remember that this just increases the cost to the corporation for employing an individual. Naturally, companies merely lower employee salaries to compensate. In effect, both sides of the payroll tax come right out of employees’ pockets. Shifting half of it to employers only creates the false perception that the tax is lower than it is. Is is simple government deception. And highly effective.

What percentage of federal revenues do you imagine comes from the payroll tax? The answer will shock you. The payroll tax has risen from 1% of government revenue in 1935 to over 40% in 2003. It was instated under the pretense of funding Social Security. It is even labeled “Social Security Tax” on your paycheck. But in fact it simply goes into the general revenue pool for Congress to spend as it wishes.

Shifting a portion of this tax to carbon emissions would have several effects: 1) Incentivizing companies to create more carbon-efficient technologies, 2) reducing carbon emissions overall, 3) stimulating corporations to raise salaries and employ more workers. All of this without increasing taxes a single cent. In fact, the boost to salaries and employment would likely generate more income tax revenues, resulting in a net increase in revenue.

Don’t Shoot the Messenger

Al Gore has taken a lot of undeserved heat for supposedly claiming to have “invented the Internet.” In fact, he never made any such claim. Rather, he alluded to his work in building up national network infrastructure during the early days of the Net’s development, and an examination of his record will reveal that his claim was perfectly justified. Al Gore’s latest bright idea was not his own creation, either, and it isn’t particularly new, but it is an idea whose time has come.

The Power to Destroy

In the landmark early Supreme Court case McCulloch v Maryland, Chief Justice Marshall made the famous observation that “the power to tax is the power to destroy.” It stands to reason, then, that taxes, when they are to be levied at all, should be levied against things we wish to reduce, rather than encourage. Whether you buy into global warming hysteria or not, it’s hard to argue that reducing carbon emissions is a bad idea. And I doubt anyone would argue against more jobs or increased wages for workers. Al Gore’s proposal deserves to be implemented.