States Target Plastic Bags
Pennsylvania could become the first state to impose a statewide tax on the use of plastic bags. Under the proposal, consumers in Pennsylvania would be charged two cents for each single-use plastic bag they receive from large retailers. More than a dozen other states have or are considering taxes on plastic bags while many localities, including most notably Washington DC and Seattle, already have imposed them.
On his Web site, bill sponsor state Sen. Daylin Leach writes, “two cents is a small price to pay for a cleaner more vibrant planet. However, our goal is not to collect the fee, but to encourage shoppers to make sustainable choices at the checkout counter”. Many policy analysts disagree and believe such “sin taxes” are merely a tax grab in the name of environmental or public health.
A study from the Tax Foundation explains, “Government-imposed charges for bags are best described as pigouvian taxes, though it is not clear how much environmental benefit the citizens will receive if fewer bags are used. The tendency, as in Seattle, is for public officials to greatly exaggerate environmental benefits. And with the likelihood of inter-governmental transfers, bag taxes may just be another way for a state or city to grab general revenue.”
Free-market advocates agree bag bans and taxes are attempts to impose unnecessary burdens on business and consumers, and little research supports the claim such policies will have any significant effect on the environment.
This week’s edition of The Leaflet features research and commentary addressing plastic bags, six myths about U.S. schools, coal power, retroactive taxes in California, the push to tax the Internet, and the AFL-CIO turns against Obamacare.
Director of Government Relations
The Heartland Institute
Research & Commentary: Pennsylvania Plastic Bag Tax
Budget & Tax
Under a proposal by state Sen. Daylin Leach (D-Wayne), Pennsylvania would become the first state to impose a statewide tax on the use of plastic bags. According to the Pittsburgh Tribune-Review, eight other states—Hawaii, Louisiana, Maine, New Jersey, New York, Rhode Island, Vermont, and Washington— are also considering plastic bag taxes.
Under the proposal, consumers in Pennsylvania would be charged two cents for each single-use plastic bag they receive from large retailers. The funds raised by this tax would be divided equally between the store and the Pennsylvania Recycling Fund. On his Web site, Leach argued his tax “would encourage consumers to shift away from using inefficient plastic shopping bags by imposing a $0.02 fee for each bag provided by a retail establishment.”
Despite the noble goals of this new “sin” tax, laws regulating plastic bag use have several major flaws. When a similar tax was implemented in Washington, DC in 2010, the revenues generated by the tax were lower than expected. According to a study conducted by the Beacon Hill Institute, the plastic bag tax in DC could cause the loss of 100 local jobs and cut aggregate disposable income by $5.64 million in 2011. The results applied to an entire state could be exponentially worse. The study also found DC will lose approximately $602,000 in investment and $108,340 in sales tax revenue as a result of the tax.
Although reusable cloth bags appear to be the most efficient way to transport goods with minimal environmental impact, recent reports show this may not be true. A study conducted in the United Kingdom found grocery shoppers would have to use their cloth bags approximately 131 times to realize the benefits that critics of plastic bags claim. The study also found reuse of plastic bags greatly reduces their environmental impact. A 2007 survey by the American Chemistry Council found 92 percent of consumers reuse plastic bags, indicating they may not be the environmental threat critics claim they are.
Reusable cloth bags also may present a public health risk due to the potential contamination of the bags by food-borne bacteria. A 2012 study by Jonathan Klick and Joshua Wright found evidence the reusable bags may contain potentially harmful bacteria. Klick and Wright examined emergency room admissions related to these bacteria after plastic bags were banned in San Francisco and found ER visits spiked when the ban went into effect, and compared to other counties, ER admissions in San Francisco “increase by at least one fourth, and deaths exhibit a similar increase.”
Pennsylvania legislators should consider the negative effects and limited value of plastic bag taxes before implementing them. The taxes are unlikely to generate the revenue their sponsors expect, while placing an additional burden on consumers and retailers, having a negligible impact on the environment, and increasing the incidence of food-borne illnesses.
Six Lies Most People Believe About U.S. Schools
In the October 3, 2013 edition of Coffee & Markets, Heartland Research Fellow Joy Pullmann discusses the role of poverty in schools, asks if everyone needs to go to college, and describes the differences between religious and secular education outcomes.
Research & Commentary: Coal Power
Coal, a black or brownish rock made from highly compressed plants that lived and died hundreds of millions of years ago, is the most plentiful fossil fuel in current use. In this Research & Commentary, Policy Analyst Taylor Smith examines the use of and need for coal power.
In testimony before the House Subcommittee on Energy and Mineral Resources, Institute for Energy Research Senior Fellow Mary J. Hutzler said, “According to the National Energy Technology Laboratory (NETL), for example, a new pulverized-coal plant reduces the emission of nitrogen oxides (NOx) by 86 percent, sulfur dioxide (SO2) by 98 percent, and particulate matter by 99.8 percent, as compared with a similar plant having no pollution controls.”
California Grants Full Relief from Retroactive Capital Gains Taxes
Finance, Insurance, and Real Estate
In this article from the Heartlander digital magazine, Research Fellow Steve Stanek discusses the bill recently signed by California Gov. Jerry Brown (D) giving 100 percent relief to approximately 2,500 small business investors who had been threatened with retroactive collection of $120 million of capital gains taxes, interest, and penalties – taxes the state had promised they would never have to pay.
The signing of the bill ends nearly a year of worry for the investors, who had participated in a tax incentive program California established 20 years earlier. The bill became necessary when the Second District Court of Appeal struck down the incentive program, ruling it violated the Constitution’s Commerce Clause because it required a business to have 80 percent of its payroll and assets in California to qualify for the incentive.
“After much maneuvering, a new bill to address objections that had been raised and roadblocks that had been thrown up was introduced, and that bill – AB1412 – is the one that Brown signed into law,” Stanek writes.
Republicans Now Leading the Push to Tax the Internet
In this piece posted on Somewhat Reasonable, Seton Motley criticizes Republican legislators in Congress for supporting Internet sales taxes. Motley argues the Marketplace Fairness Act would represent a massive expansion of state tax collection authority while undermining the physical presence standard that has protected taxpayers from out-of-state tax harassment for decades.
He writes, “Dismantling this protection for remote retail sales would create a very slippery slope for states to attempt collection of business or even income taxes from out of state entities. ... (The MFA will) forc(e) online retailers to calculate and remit [taxes] to more than 9,600 distinct taxing jurisdictions.”
AFL-CIO Turns Against Obamacare
In this piece from Health Care News, Rob Nikolewski reports the nation’s largest union federation has now turned against the president’s health care law.
Terry O’Sullivan, president of the Laborers’ International Union of North America, said at the AFL-CIO’s convention in September, “If the Affordable Care Act is not fixed and it destroys the health and welfare funds that we have fought for and stand for, then I believe it needs to be repealed. We don’t want it to be repealed. We want it to be fixed, fixed, fixed.”
The article points out, “Unions have been among President Obama’s biggest supporters and embraced the ACA when it was signed. But they have since soured on it, in part because of the Obama administration’s delay of the employer mandate to provide insurance coverage. Unions complain the act as written will encourage employers to hire fewer union workers or ditch their health plans altogether, forcing union members to seek lower quality coverage in the new health exchanges offered by states.”
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