From: Cylvia Hayes
Sent: Fri Dec 26 16:06:40 2014
To: Steve Robinson
Subject: Re: Carbon tax study
Importance: Normal
Greetings Steve,
Please call me to discuss this — 541.280.5040. Thanks. Hope you are having a lovely holiday season.
Cylvia
Cylvia Hayes
First Lady
State of Oregon
503.378.3111
From: 'Steve Robinson' <steve@decisionmetrics.org>
Date: Monday, December 15, 2014 11:49 AM
To: Mike Jordan <michael.j.jordan@state.or.us>
Cc: Tom Potiowsky <potiowskyt@pdx.edu>, MCMULLEN Mark * COO <mark.mcmullen@state.or.us>, Paul Warner <paul.d.warner@state.or.us>
Subject: Carbon tax study
Mike, we've had several conversations about performance measurement, outcomes, scorecards, and the GPI.
Last Thursday I attended a meeting at the Environmental Council with Mazen Malik, Tom Potiowsky and the PSU carbon tax study team. From the beginning, I have been leery about their model's results regarding what they call "repatriation" of tax proceeds -- that is, distributing the proceeds back into the economy through various methods, but predominantly through corporate and personal tax cuts.
They present numerous scenario results in terms of jobs lost or gained, emissions cuts, and economic "output." You know as well as I do that "output" based on GSP is a flawed concept, and you've been exploring alternate measures such as the GPI for purposes of evaluating the state's well-being and economic policies.
I am concerned lest we embark on further exploration of carbon tax policy options using the narrow definition of "output" produced by LRO and PSU's modeling. At last week's meeting, I suggested to Tom that they try to identify a few key differences between GSP and GPI in order to get an idea how an alternative measure might influence their results. I hope they do so, but in the meantime I wanted to alert you and our elite economist friends (cc'd here) of the concerns.
As an example of a specific concern regardless of the economic outcome metric used (GPI or GSP), many of PSU's scenarios use a repatriation formula of 70 percent corporate income tax cuts and 30 percent personal income tax cuts. This is an extremely counter-intuitive method that reminds me of the discredited trickle-down theory:
I hope that at some point, we can develop some specific comparisons between these scenarios and a variety of others that use more "bottom-up" repatriation methods, such as fixed rebates based on the number of taxpaying adults in a household, or total household members (e.g. number of personal exemption credits). I suspect that such comparisons will reveal either the economic/wellbeing superiority of the bottom-up method over trickle-down, or some shortcomings in the models being used that could then be modified.
If we, as a state government, are really interested in using alternative measures of well-being to gauge our progress, it seems to me we ought to start using them to evaluate critical policy choices like how we restructure our revenue system and how we deal with climate change.
I would be interested in your thoughts.
* Here I define "windfall" profits as those received independent of any action or decision on the part of the recipient.
--
Steve Robinson
Decision Metrics