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Taxes: Another Climate Change Challenge

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Tony Paradiso's picture
Principal, E3

I provide consulting services primarily assisting renewable energy-related companies in areas such as strategic planning, marketing, and operations. I have helped bring to market numerous leading...

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  • Feb 6, 2024
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If it’s not one thing in the climate change battle, it’s another.

It turns out replacing fossil fuels with clean sources of energy like wind and solar may be the easy part. The harder part could be how to replace the lost tax revenue.

Resources For the Future and the University of Michigan looked at 79 counties in 10 states to gauge the potential tax impact from migrating to renewable energy.

In six of the counties fossil fuels generate government revenues of over $10,000 per capita. In 28 counties the amount is more manageable but still significant - $1,000 per capita.

Wind and solar do provide a tax base but at lower levels. The highest per capita amount from wind and solar was found to be around $1,000. However, only 11 of the 79 counties registered renewable revenues above $100 per capita.

In 15 counties fossil fuels account for more than half of the property taxes. In 47 counties that figure is more than 10%.

The states included in the study were Texas, Wyoming, Colorado, North Dakota, Alaska, California, New Mexico, West Virginia, Ohio, and Montana.

The researchers cited the time required to gather the information as the reason they could not conduct a national analysis. Instead, they attempted to select states and counties that represented an array of energy activities including oil, gas, coal, wind, solar and refining.

#climatechange #fossilfuels #resourcesforthefuture #universityofmichigan #taxes

Discussions
Matt Chester's picture
Matt Chester on Feb 6, 2024

Interesting the spread of the states included in the study which seem to cover different geographies and profiles, though maybe not some of the smaller states. And notably no East Coast / Southern states. 

Tony Paradiso's picture
Tony Paradiso on Feb 7, 2024

I wonder what the data would reveal for the East Coast. There were a couple of other previous studies. If I have time I'll see if they have any data on the East Coast.

Mark Silverstone's picture
Mark Silverstone on Feb 9, 2024

Isn’t it a bit like worrying about the lost tax revenue if everyone were to quit smoking?

Yes, the loss of tax revenue has to be made up somehow. Perhaps there will be savings from less medical care required and fewer work days lost from respiratory ailments?

Tony Paradiso's picture
Tony Paradiso on Feb 9, 2024

Mark - it may well be like losing revenue from smoking but that doesn't negate the fact that these localities will balk at supporting clean energy if it will negatively impact their budgets. How long did it take to "win" the battle against cigarettes? As altruistic as the thought may be - I doubt anyone in authority is saying - we'll take the tax hit because we'll make it up in other indirect, long-term, and difficult to quantify ways.  

Mark Silverstone's picture
Mark Silverstone on Feb 12, 2024

You are correct. It might be unfair to call it short sighted.  But the lack of even a little farsighted thinking on the part of a great deal of our populace is frightening.  
 

That’s what makes, for example, the US health care «system» the most expensive of G7 countries, with the worst results. 

 

Tony Paradiso's picture
Thank Tony for the Post!
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