Wednesday, September 11, 2013

Support for a carbon tax is bipartisan ...

... at least among economists.

Here is an op-ed from George Shultz and Gary Becker that first appeared in the Washington Post.

Here's a nice short piece on the topic (plus some good externality theory) at The Economist, and here at the National Journal (also with good background info).

an even shorter piece here at NPR.

So, why can't we get this done?


Trevor said...

Hey all, I have always been intrigued with the idea of Carbon Taxes, and in theory it seems like a great idea. However, my main concern with carbon taxes is that it has the potential to allow the current trend of income disparity to continue. As the NPR article put it, "people with long commutes and those who work in the coal mines may suffer."

Many of the technologies to reduce carbon emissions such as "scrubbing" in factories, or Eco-friendly cars tend to be expensive. If we are putting in place some sort of carbon tax, it needs to take into account different levels of income and be graduated accordingly. For instance: How can you tell the poverty stricken single mother of 5 that her 10 year old car (that barely meets current emission standards as it is), is now going to hurt her income even more because of a new carbon tax? Especially when a more wealthy individual can afford a more fuel efficient car, better insulation for their home etc and alleviate their tax obligations.

I suppose a better question would be: How will this affect the huge corporate leviathan vs. Mom and Pop struggle we see in this country?

Wallmart most certainly can afford to install Carbon footprint reducing technologies. Can a small or new business say the same?

My main concern is that if put into place, carbon taxes have the potential to act as just another safeguard to keep the rich getting richer, and the poor under the bureaucratic foot of income grabbing legislation.


Trevor said...

Immortal Technique made a great synopsis of my prior point on the potential misuse of carbon taxes in his song "Rich Man's World":

"Only little people pay all these taxes and fees
Since you were born we controlled what you watch and you read
And pretty soon were gonna own the air that you breathe"

Dr. Peter Schuhmann said...


This is an important concern that can be handled in much the same way that income taxes are handled today. Those with lower incomes will receive a rebate (annual, quarterly, monthly) offsetting the regressive nature of the tax.

Tax revenues could also be used to fund programs to help the "Mom & Pops" adapt and mitigate. It's important to note that rich people use a lot more energy (in total) than the poor. Also, all policies will have downsides. Our job is to anticipate the downsides and design the policy so that they are minimized.

Case-in-point, the regressive nature of the carbon tax is not lost on policy makers:

Nick said...

Although the Carbon Tax could be a good idea and a way to cleanse our environment, any new legislation with the word "tax" in it will be nearly impossible to pass; especially in today's economy. It might even be the easiest and most efficient way to go about global cleansing; but due to the "Free Rider" problem in that America, as a country, can be seen as an individual, as well as other countries. And if America is taking a step forward in reducing pollution, are they acting irrationally? Because America, as an individual, is a very large polluter, and nobody can really do anything about it at the time. I realize it is hurting our environment, but at the same time, why do it if nobody else is? Why pay, and make our citizens pay, for what we don't have to? It is definitely the right thing to do, reduce our carbon footprint, but there ought to be a global way to go about it so that other developing countries don't just offset our reduction in pollution simply by polluting more and more non-stop.
Hopefully the onset of new technologies will come quick, as oil and other resources are becoming increasingly expensive and decreasingly available.

Chris said...

It seems to me that a carbon tax is a very sensible way to increase environmental stewardship. But there are definite complications with the idea as Cowen states in his article. The lag time between the implementation of a carbon tax and the subsequent development of "green" alternatives is pretty hard to estimate and many people will not or can not wait for an efficient green substitute.

Dr. Peter Schuhmann said...

Good point about the potential for free riding, however, you seem to be under the impression that other nations are not making sacrifices to reduce their carbon emissions. This is far from true. The UK, most countries in northern Europe, plus Australia, India, Japan, Costa Rica, South Africa and parts of Canada have implemented carbon taxes. China is set to begin carbon taxation very soon. The EU as a whole, as well as New Zealand, South Korea and Brazil all have carbon trading programs, which bring about the same result. So, if anything, the US is lagging far behind the rest of the developed world and even behind many developing countries.