Tax shifting out of deficit budgeting

Most governments around the world, including Canada and Ontario, went heavily into debt last year bailing out banks and industries to try to avert an economic meltdown.

But now the chickens are coming home to roost. How to get back to balanced budgets?

Increasing traditional taxes on incomes, business and consumption is self-defeating since it will damage the struggling economy by punishing business, people who have jobs and consummers. Cutting services is equally self-defeating.

The way out of this mess -- the only way out -- is through green economics, for governments to engage in extensive revenue-neutral tax shifting -- off jobs and on to nature.

Green economics (untaxing labour, and instead collecting the unearned income that accrues to sources, sites and sinks) will actually invigorate the economy and allow Canada to grow out of deficit budgeting without more taxation.

This is because the more economic rent government collects the better the economy performs, and the less income taxes collected the better the economy works. Reducing the cost of labour incents value-added production, and collecting rent disincents investment in resource pig industries.

Collecting the windfall profits that accrue to nature will put green industries on a level playing field with dirty industry. Adding modest Pigouvian taxes will tip the balance to green production.

Resource extracting economies don't generate nearly the wealth of manufacturing economies. Green economics will move Canada away from being a hewer of wood and drawer of water and toward a (sustainable) manufacturing economy.

By invigorating the productive economy and disincenting the speculative economy green economics will create many more jobs, conserve nature, and increase the revenue stream to government, allowing governments to balance the budget and continue to provide services without additional taxes.