Report: The Minnesota Ecological Tax Shift: Impact Analysis on Individual Businesses

Date: 5 Feb 1997 | posted in: Energy, environment | 0 Facebooktwitterredditmail

This February 1997 report by David Morris, Alyson Schiller, and John Bailey examines the impact of the proposed Economic Efficiency and Pollution Reduction Act (EEPRA). The bill’s introduction in the 1996 Minnesota State Legislature prompted a discussion about its impact on Minnesota businesses. This report addresses this question. It does so by assessing the net impact of several types of tax shifts on 23 Minnesota businesses, ranging from neighborhood coffee shops to equipment manufacturers and farmers and paper mills.

EEPRA imposes a tax on all fossil fuels and nuclear energy and reduces taxes on property and work. The tax in the form of a $50 fee per ton of carbon burned would raise $1.5 billion a year.  Of that amount, approximately $870 million would come from the business sector.  The money would be used to reduce existing taxes. Thus EEPRA is revenue neutral. There is no net tax increase on average. Moreover, EEPRA is sectoral neutral. The additional taxes raised from the household sector are returned to the household sector and the additional taxes raised from the business sector are returned to the business sector.

The tax is revenue and sectoral neutral but it has different impacts depending on the kind of business involved. As one would expect, labor or property tax intensive firms would benefit most from the tax and energy intensive firms with small labor forces would benefit least.

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David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.