Francfort: A Simple, But Fair, Carbon Tax
By Kevin Francfort, Staff Columnist
Published on Friday, February 22, 2013
The United States faces many tough problems. Two of these are climate change and the federal tax code. With the national budget dominating the political discussion, there has been a renewed focus on how to more efficiently collect taxes from Americans. On the climate front, this past weekend’s “Forward on Climate” rally in Washington, D.C., showcased the passion that many people feel for the issue. But while the debate about how to address these two issues has raged, there is one policy that addresses both issues but politicians refuse to seriously consider: a carbon tax.
A carbon tax would consist of a tax levied on each ton of carbon dioxide emitted in the manufacture or operation of a good. The motivating factor is that there are costs associated with carbon emissions that are not borne by producers and consumers of fossil fuels. These unpaid costs are based on the premise that excess carbon dioxide in the atmosphere may be causing climate change, which carries many future costs. These costs will come from rising sea levels and higher incidence of severe weather events. To ensure that the costs of these actions accurately reflect their social price, a carbon tax would need to account for the future costs of climate change.
A carbon tax essentially boils down to paying for the full cost of an activity. Such an idea seems fair and justifiable. But when considering the implications and unknowns that would accompany such a policy, it makes sense why congressmen constantly seeking reelection are averse to advocating for such a tax. Questions over the costs of administration of a carbon tax, as well as the equity and economic impacts are reasonable concerns and ought to be answered.
Though many politicians and citizens refuse to even debate the merits of a carbon tax, it is more prudent to resolve such harmful impacts than ignore the issue altogether. The prohibitive administrative costs of asking each taxpayer to file a tax return with their CO2 emissions can be easily remedied by taxing carbon upstream in the market. Only requiring refineries, mines, gas processors and importers to pay a carbon tax could cut down the number of filers to roughly 3,000 businesses. Similarly, the revenues generated by a carbon tax could be used in a green employment tax swap to reduce the payroll taxes paid by those who might be disproportionately affected by a carbon tax. The economic impacts of such a tax would be great, but would pale in comparison to future costs associated with higher sea levels and more frequent severe weather.
Such a tax would need to be gradually implemented, so as to allow businesses and individuals ample opportunity to respond to its effects. At the same time, a carbon tax would allow these affected parties the foresight of knowing future costs per ton of carbon dioxide emissions, something that cap and trade policies, which have been proposed in Congress in recent years, fail to do.
By partially replacing the payroll tax with a tax on carbon use, we could greatly improve the efficiency of our tax code. Payroll taxes, in the same vein as income taxes, are necessary to generate revenue but also discourage work. Assuming that there is even a chance that human carbon emissions are partly responsible for climate change, it is obviously more efficient for our tax code to discourage these harmful emissions than productive labor.
Because a carbon tax provides an efficient alternative to current taxes, it is promoted by renowned economists such as Nobel laureates Gary Becker of the University of Chicago and Joseph Stiglitz of Columbia University. In theory, it would provide an equitable tax code and steer us away from future costs. But too often it seems that good policy fails when it makes it to the Hill. So, it is with cautious optimism that we ought to pursue a carbon tax. With government spending already at record levels, we must ensure that the carbon tax does not become just another source of revenue for a quickly growing federal budget. However, if implemented correctly, a carbon tax can transition our economy to one ready for the challenges of the 21st century.
Buy Big ALS new Book. The Future. Impressive take on the current drivers of global change. Humans send an extra dose of carbon into the air that nature can’t handle. http://clmtr.lt/cb/pkg0eV
By Big Bird on Feb 22 | 10:57 am
Hey, I know, the US is getting thrown down the sewer by the Democratic Party so while we’re at it, how about a carbon tax on top of the new Obamacare fiasco tax and spend health insurance mandate. Let’s just get the governments' greasy fingers in every pie possible. Who cares if warming is happening or not…hint, it isn’t, not human induced warming anyway. A carbon tax isn’t going to transition our economy into anything but another tax. This is just another way for the government to control the people. This country was founded for the freedom of the people, so how does this additional takeover promote liberty? It does just the opposite. Next will be a monitor on each person for taxing whatever gases come out of you personally, how does that help us transition the economy for the 21st century. Get the government off our backs and put the people who spend all day thinking about how to take everything away from the people to work in the private sector, that would solve the problems. it is unproductive losers who are screwing the country, not the people who are producing. And isn’t producing what we want? Or is it lying around and living off of the productivity of others? There should be a tax on that.
By Robin on Feb 22 | 1:07 pm
Great article, a carbon tax would be a bold step to address climate change and would definitely be a better tax than our current system. It is a shame how little our political leaders have done to address climate change.
Don’t be so tentative though about human’s role in causing climate change. Of 13,950 peer-reviewed scientific articles published between January 1991 and November 9, 2012 that mentioned “global warming” or “global climate change”,the grand total of articles that questioned whether climate change was being caused by humans, was 24,– 0.17 %.
source- http://www.desmogblog.com/2012/11/15/why-climate-deniers-have-no-credibility-science-one-pie-chart
By ‘15 on Feb 22 | 1:40 pm
The fact that it is now called climate change and not global warming happened for a reason. There hasn’t been any global warming for 16 years and the fake models that predict warming from human activity do not work. That’s why the emails from the climate agencies spilled the beans on the fact that they couldn’t make the models that predicted warming fit with the empirical data which proved that there was no warming. Ooops. But who cares about facts when you have such a strong consensus that is wrong. Don’t bother to write anything in reply, it won’t change the fact that the reports, studies and models all got it wrong. Gee, there hasn’t ever been another time when “Science” turned out to be wrong is there? The decelerating expansion of the universe that has turned out to be an accelerating expansion? That didn’t happen did it?
By Anon on Feb 23 | 2:34 am
It’s not about more taxes, but about shifting the taxes. Taxing those that pollute incentivizes them to reduce the pollution, and they’re in the best position to reduce the pollution. For example, if you placed a carbon tax on auto makers they have an incentive to create cars that produce less emissions. This fosters innovation and makes our environment cleaner. At the same time you reduce the payroll taxes of the polluting company. Or better yet, reduce income taxes on individuals. Either way the consumer wins – cleaner environment and less taxes. If the consumer wants to buy a big, fuel inefficient car, they will pay more, but they now have the power to make that decision with their wallet. Tax what you burn, not what you earn :)
On the subject of climate change, the science is very clear that it is human induced and it’s happening. It’s important to look at motives. There is no motive for 10,000 plus Independent scientists around the world to falsely determine that climate change is happening. When you’re being paid by Exxon for your research, you may come up with different results. And if that doesn’t convince you, think about it from a pure logic perspective. Our bioshere is a closed system. We are puttting CO2 into the atmosphere at unprecedented rates. That’s bound to change the climate.
It’s not only democrats or greens that have agreed that humans are inducing climate change/global warming – pricewaterhouse coopers recently released their climate report stating that at the rate we’re putting GHGs into the atmosphere the world will warm by 6C by the year 2100. Scary stuff.
By Kristyn on Feb 23 | 4:16 pm
How would you get a upstream tax on /oil & gas shareholders, the wealthy, passed by a Congress owned by “O&G”? Good Luck!
By John on Feb 24 | 5:00 am