Steven Rappolee

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carbon taxes placed every year in an invested sovereign wealth fund for children born that year and every year after.

the fund would be controlled by the
social security administration and the federal reserve board.
the fund would be invested in world capital markets and not in
government Treasury's
** Individuals would never have control over the principle and interest over their accounts except in extraordinary circumstance.

#1 $200 billion per year in carbon tax divided by 4 million newborn
children equals $50,000 per child.

#2 $50,000 at 7% growth rate x 60 years would have $3,293,876.56
assuming no annual additions.

#3 why no additions? the newborn child when of working age must pay
their payroll taxes into the old SSI system!( to pay for SSI for those of us alive today)

#4 $ 200 billion every year x 7% growth rate equals out in 60 years to
$199 trillion! This is an astronomical sum.

#5 In 60 years no one would qualify for any social welfare program
after 60 years of age saving untold billions in tax revenue, this is
revenue neutral but over generations

#6 $199 trillion invested in the worlds capital markets will bring
world poverty to a fast end and bring world birth rates down

#7 The carbon tax will not be forever, this sovereign wealth fund must
become perpetual through cross generation funding of newborn children
from the fund itself in 50 to 60 years from now. Starting 60 + years from now children born in those years and after would receive their $50,000 from the carbon tax if it still exists and the remainder from their parents or grandparents sovereign wealth fund accounts.
#8 50 to 60 years + from now federal income tax receipts will sky rocket from the retirees receiving $150,000 income.

** $3,293,876.56 x (10%) = $329,387.656 The individual would be entitled to 40% of this.or about $131,754.8 per year, 100 years after enactment no one over 60 or even an early retiree would be in poverty

  • Jan 7 2012: Steven,

    Not to be a negative nancy, but here are the immediate problems that spring to mind:

    (1) You need to re-adjust your calculations to account for inflation. In constant 2012 buying power dollars, $50k today invested for 60 years at a rate of return of 7% less a 3% rate of inflation is actually be more like $500k.

    (2) The tax policy center already projects that people who turn 65 in 2030 will extract a lifetime benefit from social security and Medicare of around $550-600k on average (see ref below). What you're proposing (paying out 25% of the $500k carbon wealth made from an investment in that persons name) amounts to somewhat less than a 25% increase in social security benefits funded by carbon polluters. Its a nice sum, but somewhat less I think than you're implying.

    (3) In the US the basic political question is always "why is it the government's responsibility to make these investments, and not an individual or family's responsibility?" You haven't answered that question.

    (4) As with any carbon tax, you have to keep in mind that industry is going to pass these costs on to their customers. The end customer for everything is the average consumer. There will be price increases. We can debate about whether that cost is smaller or larger than the cost of global warming, but you haven't made an effort to quantify the cost of global warming.

    I admire your approach of linking a climate change policy to the wealth of future generations, but I think there is still thinking to be done. The main issues to be answered about global climate change are in quantifying the costs of inaction and negotiating what percentage of GDP we're willing to spend to defray those costs. So far the answer to those is "we dont know" and "none".
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      Jan 9 2012: From the FAQ Carbon tax center,

      "14. How much revenue will carbon taxes generate?

      A lot, if the taxes are set high enough to have the needed impacts. A federal “starter” carbon tax equating to 10 cents a gallon of gasoline, but applied to all U.S. fossil fuel burning, will bring in roughly $55 billion a year in revenue. This equates to around $180 per U.S. resident, or $720 for a family of four. (Thus, a family that paid less than $720 a year under this starter tax would come out ahead if the carbon revenues were rebated equally.) Successive carbon tax installments adding the same 10¢/gallon equivalent would each add another $50 billion or so to the aggregate annual revenue stream. By the end of the tenth year (assuming annual installments), the annual revenue would be on the order of $500 billion."

      The carbon tax center would rebate the taxes back in that year, I would not.I transfer the funds to capital for future new born children.

      I would place $200 Billion per year in new born children invested in the SSI/medicare sovereign wealth fund.
      I would place $150 Billion per year in a invested sovereign wealth fund to shore up the existing SSI/medicare system.
      I would pay dividends to offset energy costs to the lower middle class and below.
      80 years after enactment the first carbon trust fund children will have died the remainder of their accounts will be commingled with whatever carbon tax is left in those future years to those new born children born in those future years
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    Dec 21 2011: Interesting sums.Would take some serious government discipline I suspect.It all seems very theoretical though, and there is a large link between wealth generation (economic markets) and natural resources(resource markets). That is, the economy and the environment are linked, so if you implement economic tax and penalise a market, you alter resource use, hence I'd imagine it would be complex and sensitive.

    I beleive that Eco taxes have been, and will continue to be mismanaged, so i think you have a fresh idea.
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      Dec 21 2011: I believe you are correct in that it would be complex and sensitive, i would like to see my idea studied more by the social security actuarial office or the THE OFFICE OF THE CHIEF ACTUARY

      of course they would need to know how long a carbon tax would last and this would be connected to CO2 rate of reduction in response to a carbon tax, The carbon tax center has a spreadsheet,

      The carbon center folks believe in reducing payroll taxes as a carbon tax offset in the current year and I have been unable to engage them in a conversation about investing the carbon tax in future generations.
      carbon cap and trade and individually controlled SSI/medicare invested accounts IE privatized SSI are an open invitation to fraud and a financial disaster like the one that started in 2008.

      In 2010 the world GDP was $60 trillion, in 60 years at 3% growth the world GDP should be $362 trillion.So what effect does our $200 trillion SSI/Medicare sovereign wealth fund have on world GDP? I think in part the added investment would add to the world GDP growth rate and the SSI fund would own a percentage of global capital markets.

      A recent paper discusses the economic investments required to put in place a space based solar power system in geosynchronous earth orbit.The cost where in the hundreds of billions of dollars over many decades

      The capital costs of such a carbon neutral system would be less then 2% of the SSI sovereign wealth fund.
  • Jan 9 2012: This is amusing.

    Straight line projections, unintended consequences, tunnel vision, no mandate, no financial competence, tax-funded, a dash of globalism, and paranoia concerning the world population.

    Steven, are you a bureaucrat?

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      Jan 9 2012: policy wonk


      most folks I know would like to improve the standard of living of the global population, this would have the intended consequence of bringing down population growth rates,
      what! you hate taxes? I want to invest the money in new born children every year for the long term, Seth do you hate children?
      and taxing polluters brings me great joy and good tidings :)
      you are right there! my country's tea parties and republicans only are interested in the here and now and would sooner let the ocean waves cover Florida and New Orleans before acting, Still my idea of an invested SSI fund is something some fiscal conservatives like so my idea might very well be bipartisan.
      • Jan 9 2012: "Policy wonk. Unpaid."

        You mean unemployed?

        You are arguing to slow birth rates. I want them increase them. That is to say - you see them as a liability, I see them as an asset. Who hates them? You.

        "So my idea might very well be bipartisan."

        You mean like the authorization of the war in Iraq or like the senate's unanimous negative vote on Obama's 2011 budget? See if you know the difference, policy wonk.

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          Jan 10 2012: Seth,
          i see you have no profile here, are you a troll?
          every citizen should spend there off time thinking about how to improve our planet, off from work or as in a student statues.
          we call it volunteerism
          you want to increase birth rates planet wide? and with out concern for their welfare or happiness?
          my carbon tax fueled sovereign wealth fund creates wealth for future american new born children, but it creates jobs for people the world over.
          have you heard of the many micro loan programs that help poor people the world over start small business such as a fruit stand in a local farmers market, many of these programs are coops but they turn a small profit, worthy of an investment from a larger player.
      • Jan 10 2012: Steven,

        "You want to raise birth rates planet wide?"

        Yes. Because when I 'spend off time thinking about how to improve our planet,' I try to reconcile our scarcity of resources with a continued expansion of world population. If your 'solution' to a problem is prefaced upon, or might result in, a decline in population expansion, then scrap the idea.

        Let's walk through your proposal -

        You instill a carbon tax.
        You begin taxing 'polluters.'
        'Polluters' are major industrial and manufacturing companies.
        You take money away from the companies.
        Then you invest the money right back into the companies through your investment in the capital market, which is to say stocks.
        What have you actually accomplished?
        You have shuffled money around to give yourself an occupation.
        This is why I asked if you were a bureaucrat.

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    Jan 9 2012: Steven. I’ve kind of gotten lost with all of your equations and formulas. Here is one I understand:

    consumption is less then or equal to production.

    My impression is that you seem to have calculated a way to consume without producing. Why should I even bother trying to work through the equations?

    btw - You didn’t used to work at calculating credit default swaps, did you?
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      Jan 9 2012: Tim, Oh no I used to work for a labor union and I belong to the national center for employee ownership, so far from what you suggest I am for more regulation of banks and credit cards not less.I am also always looking for ways to have a more egalitarian society, so carbon taxes are needed to control the growth of CO2 emissions, important for our future.
      investing and growing carbon taxes in the stock market should be a simple enough idea? Adam Smith can explain it to you :) capital growth in stock markets reflects putting people to work and resulting in production.
      in 60 years this would result in over $200 Trillion in the social security system.

      But Tim if you are a atmospheric warming denier or think the existing social security system with its $14 trillion in borrowed federal security's is the way of the future then , no you should not read any of my equations!
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        Jan 9 2012: Yes Steven. Agreed we must balance the inflow and outflow of the Social Security system. But no amount of creative investing is going to change a basic fact on the macro scale:

        what gets consumed must be produced.

        What am I missing?
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          Jan 10 2012: Tim,
          I am no economist but in a honors class last year I explored Adam Smith and Karl Marx, capital is "rented money" or Marx would disagree and stated its exploited money that bares little resemblance to labor.
          so I leave my money with the stock market or bank, I am hoping it grows.I am sure its used to expand the means of production or factory or jobs increases.
          so Tim, time and money grows production right?
          workers have jobs do to private and in some cases government spending but the money invested in expanding production or services is responsible for the ability to consume services and goods
          the key here is time and capital( or money) is this right?
          So the carbon tax center advocates a tax to solve an important social problem CO 2 emissions, we want less consumption here of a product that is produced, conservatives would yell this would slow economic growth, consumption so the carbon center advocates tax trade offs IE we will reduce the payroll tax by the same amount as the carbon tax.
          market forces course conservation the carbon tax rebate returns that spending power to the tax payer
          Tim Colgan this plan might be, "what gets consumed must be produced" but with no growth or loss?
          coal miner is laid off, high tech green worker is hired
          or the club of Rome was right but also wrong
          I agree with the carbon tax center some of the carbon tax should offset the costs of energy to the poor, but who are the poor?
          new born children and the elderly! my plan does the help them today or tomorrow but 60 years from now it will.
          and much of the magic is through compounded growth of capital invested during those 60 years.
          $200 Trillion !
          "what gets consumed must be produced"
          well Google "earths GDP" you will get 68 Trillion,grow that by 3% for 60 years and that amount is only 10 % more then the SSI sovereign wealth fund This I think is wrong, I believe that over 60 years this money rented over time would increase the world GDP growth rate above the 3%
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          Jan 12 2012: 10,000 children are born in Alaska every year, if the Alaska permanent fund placed $4,000 into a trust for each child born every year this would involve the Alaska permanent fund transferring $40 million per year.
          $ 40 million every year at 10% growth minus 7% inflation for 60 years yields just short of $40 Billion! An amazing result. This would represent 60 years times 10,000 births or 600,000 Alaskans. At age 60 each Alaskan born child would have $263,510.13. We can do better!
          As long as the child stays a resident we should place into this trust 30 percent of the dividend each year, let’s say $400. $4,000 at birth plus a $400 annual addition at 7% for 60 years yields $636,401.46.If we let the citizen have 5% every year at 60 this is “only” $32,000.However this amount meets my goal of at a future date certain, the need for government social welfare transfer payments to the elderly would end, this would most like happen 80 years after the year of enactment when most Alaskans between 60 an 80 years of age would be beneficiaries .
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    Jan 7 2012: Matt,
    thanks for replying!
    (1) world stock markets have done much better then 10% over the last 70 years, my 7% accounts for inflation its 10% minus 3%

    (2)$ 130,000 x 20 years of retirement = $2,600,000, more the enough to end most government spending from then year taxes on social welfare programs for the elderly, and to purchase insurance that covers medicare costs.

    (3) Conservative and libertarians make this argument! and in my country citizens actually vote for these people.Deregulating capital markets and not protecting consumers from real estate market fraud caused the 21st century's first depression and nationalization of heavy industry and banking.
    it is the governments responsibly to wisely maintain national pension and health systems. I would mandate that all employers offer 401 K plans to employees.My plan is a bipartisan in that it is a partial privatization of social security.
    (4) in a the post above is a excel spreadsheet with carbon tax costs, I will post it here again,

    for each $55 Billion in carbon tax is equivalent to about 10 cents tax on gas so 70 cents per gallon for my plan.The carbon tax center believes $500 Billion per year would reduce CO2 to below Kyoto levels.They would rebate the tax to reduce payroll taxes.
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    Dec 21 2011: some rules,
    (1) no government agency may treat these funds as assets for computing any government benefit or forfeiture,unless you are drawing a retirement check, then that check is computed as income.
    (2)A individual "may" be responsible for paying out their account the $50,000 into their children and/or grandchildren accounts.( this explains (1) above)
    (3)As the carbon tax works its magic and stabilizes and then drops CO2 emissions, carbon tax receipts may start to fall. ( this explains (2) above) .
    (4) an individual may retire early as long as their SSI income is 200 % above poverty level and all the above rules are complied with!