If you annoy me, that is an "externality," right?
And we should tax negative externalities? Not right.
Nice piece in NYT, with cute cartoon.
(Nod to Anonyman...)
And we should tax negative externalities? Not right.
Nice piece in NYT, with cute cartoon.
(Nod to Anonyman...)
4 comments:
That's actually really interesting. Why NOT an annoyance tax? After thinking about it a while, I suspect that the real problem with an annoyingness tax is that pigouvian taxes ought to be on costs that track widely-shared preferences. If injury to one person's idiosyncratic preferences counts as an externality, then we get tax wars: I annoy you for some idiosyncratic reason, so I get taxed, but then your stupid preferences over what annoys you annoy me (doubly so since now I have to pay for them), so YOU get taxed, and so on and so on.
On the other hand, what about things that annoy everyone? Would it be so bad to have a screaming babies in public tax?
I understand the concept of a pigovian tax on driving. Those that drive cause externalities -- positive and negative. Taxing guns in the same manner causes difficulties when one considers that not all observations will cause an externality and those that do (at least of the negative variety) will likely be committed by someone who hasn't paid the tax. So this really isn't a pigovian tax in the true sense.
Pigovian pricing's intended results are surely equally offset by the negative externalities of the transaction, unless the transaction is between the agrieved indivuals and the individuals generating the negative externality.
Even if the externality is priced "right", paying Jim a dollar from Joe for the harm he does to John, does John little good. Followed by Jim spending his ill gotten gain and distorting the market equally to the market correction that was applied to Joe.
+1 to Adam Davidson for spelling "Pigovian" correctly.
-1 for calling Pigou "Alfred".
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