In the past, support for environmental initiatives in the United States has been embraced by those on both sides of the aisle. Democrats have also made leaps and bounds in environmental protection laws including their staunch defense of the EPA. Republicans can lay claim to one of the most militant conservationists, Theodore Roosevelt, who established national parks and forests.  However, today, the cooperation between the two parties has broken down to the detriment of everything from the environment to the economy.

While the common myth is that Republicans do not believe in Climate Change while Democrats are too hysterical over the same issue, the truth is, we are running out of time to debate and deliberate and 60% of Americans agree, according one gallup poll, that Climate Change is already occurring. Policies which appeal to both parties need to be formulated and implemented immediately.  One such policy may be a sales and income tax holiday for carbon neutral goods.

This tax holiday could be enacted on the State level at first, as sales taxes are local in nature and can be changed arbitrarily without violating federal interstate trade agreements.  A tax holiday would increase incentives to produce carbon neutral goods while also stimulating the budding industry of carbon accounting.  By putting a tax holiday on carbon neutral products, states effectively lower the price of these products by a significant percentage.  Furthermore if state income tax on profits made from carbon neutral products were eliminated, this would effectively reduce the price of such products by up to 20% just on the state level.

This would not cost anyone anything since at present, goods are not carbon neutral, and thus, most products would not qualify.  However, it would bring an entrepreneurs to invest in carbon neutral products which could be manufactured domestically.  At first, the laws would benefit small, innovating manufacturers because only these manufacturers are flexible enough to change their production processes.  Furthermore, because income tax is also eliminated, the physical production of these products would likely be located within the state rather than outside, to take advantage of the additional tax incentives provided by the state governments. 

In fact, this policy would like increase revenues due to two reasons, an increase in labor based income taxes from the increased number of jobs which would result from increased domestic manufacturing.  Furthermore, because carbon neutral products are desirable throughout the world, exports would also likely grow, while placing the US in the forefront of clean products, without complicated international treaties, or new taxes on carbon.  Exports of advanced technologies which facilitate the removal and sequestration of Carbon Dioxide would also increase since this tax law would also create a domestic market for these products.

For example, if a car that costs $25000 produces up to 17 tons of Carbon Dioxide to produce (http://www.globalchangeblog.com/2010/09/whats-the-carbon-footprint-of-building-your-car-and-how-does-that-compare-to-tailpipe-emissions/), the tax law would create a tax holiday of 5%-15%, if the car were carbon neutral including sales tax and income tax.  At present a ton of CO2 can be removed from the atmosphere for approximately $200.  Thus, it would cost the Car Manufacturer approximately $3400 to remove the carbon dioxide at present prices to make the product a carbon neutral product.  However, the manufacturer could also price the car up to $3750 less than a comparable car that is not carbon neutral.  More importantly, the technologies which remove carbon dioxide would be put to use and the cost of removal would naturally drop.

Without some initial steps towards encouraging carbon neutral products, a robust market for carbon free products will not develop.  By implementing a tax holiday on the local level, political obstacles may be overcome, while also encouraging domestic and local production of goods.  Furthermore, such a tax holiday would also encourage foreign producer as well as importers to consider making their goods carbon neutral in order to  take advantage of the tax holiday. 

However, it does not cost the state revenue, in contrast to cap and trade, where governments would have to pay companies directly.  It also does not cost the consumer, as the proposal constitutes a carbon tax cut rather than a carbon tax.