Pollution Abatement & Reduction Councils FAQ

Here I will try to answer some legitimate questions raised about PARC. (Should you have any questions use the email form at the end.)
(Note- the next 4 questions are from a Congressman and my replies to him.)
Congressman - "Although you may argue that PARC is not coercive, I remain unconvinced with this claim."

Nothing in PARC is coercive nor is intended to be. However I can see where as (if) it moves through the legislative process, pressure could build from various interests (particularly environmental) for coercive covenants be added to PARC. In general I would, of course, oppose, but have no control over, any such amendments. That would be up to the sponsors of the bill (of which I hope you'll be one) to resolve via the legislative process.

It's important to note that one very significant, if subtle, side benefit of PARC is to provide a new model for the government role and responsibility in environmental protection in that it provides opportunity, not prohibition; direction, not control; and facilitation, not coercion.

Congressman - "I have not seen substantial evidence to prove that PARC would spark the creation of thousands of additional jobs."

The basis for that claim is the proposed expenditure of two billion dollars a year in abatement . For example if stack scrubbers are added to a plant, jobs are created building, installing and maintaining the scrubbers. The same for containment ponds, sewer plant upgrades, or any other of the myriad of abatement projects PARC would finance.

The "thousands" estimate comes from dividing $27,000 (the median income in the US) into the two billion which yields roughly 75,000 direct jobs a year without adding any economic multipliers (generally 3 to 1) or job opportunities created by a cleaner environment (fishing, recreational, etc.). The counter argument, of course, is that an equivalent number of jobs are removed from the private sector via the tax. The discussion then quickly becomes circular.

The only response I can make is the abatement jobs are much more productive long term in that a healthier environment creates opportunities that are otherwise being lost (fishing is an obvious example but maybe also from shorter life spans and increased medical costs due to air pollution).

Congressman - "In addition, the implementation of PARC would require an additional tax that I do not feel is justified. The American people are already taxed at a high rate. Roughly 40 cents of every dollar we earn goes to the local, state, or Federal government in the form of taxes. Creating an additional tax for PARC would not be economically wise at this point in time. "

Let's just look a perspective using some actual figures. The median income is $27,000 of which nearly $11,000 is currently going to taxes (the 40% estimate). The National Fisheries Institute estimates retail seafood is a $40 billion a year industry (my basis for the $2 billion PARC tax revenues).

Dividing the $40 billion by roughly 100,000,000 income earners yields a $400 per year expenditure on retail seafood, which means the tax would cost each income earner $20 on average (a total tax increase of .00185%), or $200 over the life of PARC (sunsetted in 10 years). During that time that same income earner will have paid well over $100,000 in other taxes.

I will argue the ROI (Return On Investment) to the income earner from PARC taxes far outweighs nearly all other taxes he pays but, of course, we are getting into a very subjective area.

Further, in light of the numbers above and in light of the obvious, almost immediately visible, benefits PARC would bring, I refuse to believe Americans wouldn't support it if the case were presented fairly to them.

Congressman - "I would be more inclined to examine the merits of PARC if it was funded through voluntary donations of American citizens, rather than a required tax."

A - Certainly voluntary donations would be much more desireable. But that's just not possible. Let me put it in perspective for you. The TOP TEN Largest Environmental organizations in the US raise $600,000,000. Now that's a lot of money, but when you factor in the cost of raising it, plus the administrative staff to take care of it, you'd be lucky to end up with a third of that, which would only be about 10% of what the small seafood tax would raise.

So you see, it just isn't practical and just imagine asking GreenPeace, Sierra Club, Audobon et al to hand all their revenues over to polluters. (Now that would be a sight to see.)

There are possibilities however that may be worth exploring that would avoid a direct tax (perhaps surcharge would be a more palatable term than "tax"). Maybe some sort of mechanism could be implemented whereby retailers could donate 5% of their revenues to PARC in return for tax credits. It effectively does the same thing as a direct tax but without as much of the negative connotation of an outright tax. Taxing policies are not an area I am all that familiar with but I suspect such a mechanism would bring its own troubles with it.

Q -Just what is the Primordial Soup Theory you're talking about?

A It's my contention that at absolute base all life is result of complex (often intricate) chemical interactions. I believe that to an increasing extent, the absolutely awesome (even unfathomable) amounts of pollution (in all its forms) the world is experiencing today is having an effect on those chemical interactions.

It's well known that a single iota of something can affect an entity a billion times greater in size. I believe that nowhere is that more evident than in the oceans which are the eventual repository nearly all that awesome load of pollution.

Q - Why do we need yet another Government regulatory program?

A -PARC is NOT a regulatory program. It's SOLE function is to provide a funding mechanism for funding projects that may (or not) be required by regulation.

As for it being just another Government program that will grow and take on a life of its own like so many do, three provisions guard against that:

  1. The requirement that 90% of revenues be available for loans which leave a "ceiling" of 10% to limit bureaucracy growth.

  2. 75% of the management structure comes from the private sector.

  3. The 10 year sunset provision of the tax. After that the program is completely self financing.

Q - Isn't taxing food a dangerous precedent? I don't like the concept of taxing food.

A - Certainly that's always a danger. In this case staples of life are not being taxed, only a luxury item. I really doubt that many lobsters, scallops, or salmon are being bought with food stamps or are part of School Lunch Programs. It's been a long time since purchased seafood has been a staple of anybody's diet in this country.

Q - AKA tax one food for one reason and maybe open the floodgate to a save-the-flowers tax on beef, save-the-rivers tax on pork, save-the-children tax on baby foods etc. etc. etc.

A - As far as Saving the Flowers with a beef tax, I probably wouldn't mind too much if the tax were limited to filet mignon as is effectively the case with PARC.

And I don't think even the most radical Keynesian economist would advocate taxing baby food.

Yes and there always WILL be good causes. And if an outweighing benefit can be tied as closely to flowers and beef (especially if it's only going to be filet mignon that will be taxed) as the PARC tax then let's have it. Now whether PARC could be used as a taxing precedent for other food taxes is, of course, a danger but I suggest to you if they are as carefully tied to a specific goal as PARC is, it would not necessarily be a bad thing. Don't forget the goal of PARC is to drive DOWN the cost of seafood. And even that is only incidental to the real benefits - Cleaner air - Cleaner and more productive rivers and oceans - ...... for everybody, not just commercial fishermen.

Q - See, everybody has a cause, some are good solid causes (like addressing water pollution) while others are just fundraising schemes, and unfortunately a lot of schemers have the political power to make crazy ideas into laws. Look at the dolphin-safe nightmare, for example. And one California lawmaker has a bill that would essentially mandate the use of Marine Stewardship Council ("a voluntary initiative") - style eco-labeling for seafood sold in this state (nightmare). So... I'm reluctant about any food tax, sets precidents that could drive up the price of food over the long term, and not necessarily for the good of society or the environment.

A - The KEY is the three factors answered above in the first question. They ensure that PARC stays on track and doesn't get tied down in satisfying one particular interest's agenda.

As for the legislation being subverted, that's of course, always a danger but it cannot be allowed to be a reason for doing nothing. That kind of attitude is more dangerous to our country than even pollution is.

Q - I'd like to see a healthy oceans taxes on car sales, chemical products and gasoline (!!)

A -Actually if you look at it a little more closely you'll see that PARC is a tax on polluters (via loan repayments). We're just not calling it that.

Cars already have a hefty pollution tax by other names (emission controls and mileage requirements). Gasoline is already taxed pretty good (some say not enough) and it would be politically difficult to divert any of that tax to finance a farmer's settlement pond (for example).

The seafood tax has a direct tie in with ocean pollution. The mandate is so broad (almost everything affects the oceans) PARC can reach a wide spectrum of problems that might be difficult to justify elsewhere.

I think it would be more difficult to *tie* a tax on cars or gasoline or chemicals to cleaning up ocean pollution, though certainly they are major contributors.

I suggest to you that pollution is already "taxing" seafood by making it more scarce hence expensive. Actually I will make the case that a small limited tax now will reduce the current "tax" burden a thousandfold in the decades down the road.

Q - Why tax anything? Why not just tax the polluters outright? It just doesn't seem fair.

A - Certainly a direct tax on polluters would be much more equitable (and palatable). But consider a couple things:

Q - You've mentioned stack scrubbers, what else do you see PARC financing?

A -Aside from all the obvious candidates (like dirty smokestacks), I can see it ranging from the most subtle, say like financing the driveway of a homeowner who wants to use paving blocks instead of asphalt, which allows rainwater to soak back into the ground rather than running off into the streets..

I can see it financing a company to convert gasoline cars to electric power or natural gas.

I can see it financing containment ponds for paper manufacturers, farmers, chemical plants, power plants, etc.

I can see it financing environmental groups who want to buy sensitive wetlands, marshes, etc. to keep them from being developed (as long as they can show a reasonable repayment potential).

I can see financing runoff grading for highways, .......

I can see loans ranging from as little as one year to as long as 50 years with a whole range of interest rates, repayment amortization schedules, ....

Q - Won't PARC be in conflict with private financing mechanisms (banks, bonds, etc.)?

A -Yes it will in a lot of cases, and that is likely to bring resistance from those sources. However it's a big field and there's room for everybody. Certainly PARC will be able to offer financing cheaper (via lower interest rates and longer paybacks) than banks (who have to make a profit for shareholders - PARC's "profit" is a cleaner environment), but it isn't like PARCs would be in direct competition with them. PARC's mandate is clearly limited to pollution abatement projects.

If the banks should lose a little business here well we'll all are gonna have to give up little to straighten this mess out. There may be a way to involve the banks in some sort of administrative and collection role. (It's done here in Ocean County on a far smaller scale with a fisheries related program and quite successfully.)

I suspect the biggest resistance will come from the Security Provision (where the PARCloans have the highest claim, above any other mortgages, etc., except for maybe certain taxes), a provision I believe is necessary for guard against PARC getting embroiled in the types of situations the S&L industry went through in the 80's.

Q - I found the articles interesting and think there is some merit to the agenda. I even voted, but I really don't know any of you personally, and that makes it hard to put all my trust in your organization. Being from Utah, I don't know how much affect or focus your organization will for us, often forgotten people. ......

A - While Utah doesn't appear to have much to do with oceans, people in Utah still pollute (it's inevitable in our society, short of living like a mountain man of the early 1800's - even that's open to discussion).

You use electricity, drive a car, wear clothes, have factories, ..... use goods from outside Utah - all of which had to cause pollution in one form or another, so you do contribute to the problem, even if only indirectly.

Further I would guess Utah doesn't have an abundance of seafood outlets so there wouldn't be much of a burden in terms of the tax. As far as any increased cost of goods due to pollution loan repayments adding to their cost, how can you argue with that? Those costs are the direct abatement cost for any pollution caused to make the goods.


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