Welcome to the Carbon Tax Ticker

Earlier this month I released a paper cataloging some of the virtually innumerable shortcomings of the carbon tax. The motivation for the paper was much the same as the motivation for this newsletter: that some on the political right are being swayed by what I think are spurious arguments. You might find it interesting or helpful to your efforts and I invite you to take a look.

You can read the paper’s key points below.

You can read the paper in its entirety by clicking here.

And, if you feel so inclined, you can spread the word by sharing this tweet.

  • Carbon taxes are set arbitrarily.

Carbon taxes are set using non-objective standards. The much-debated “social cost of carbon” is a subjective construct that relies not only upon multi-century climate models, but also upon analyst preferences, most notably the highly contentious choice of a discount rate for public policy.

  • The climate change mitigation goals of the world’s leading political bodies are at odds with the climate economics literature.

The 2018 IPCC recommendation for governments to implement policies compatible with limiting global warming to 1.5°C above pre-industrial levels ignores the economic harm such policies would impose in the near term. The recommended course would be likely to cause more economic damage than global warming itself, according to mainstream work in climate economics.

  • A U.S. tax-and-rebate plan would slow economic growth.

Americans in the lowest income quintile use a greater percentage of their income to meet their energy needs than the remainder of Americans, rendering carbon taxes regressive. So-called rebates can attempt to offset this effect, but only at the expense of the economy as a whole. According to most studies—including those coming from carbon tax proponents—carbon taxes slow economic growth unless a large portion of the tax revenue is allocated to corporate tax reductions. Recycling revenue through rebates is particularly harmful to overall economic performance.

  • Carbon taxes have unexpected, adverse tax effects.

Carbon taxes initiate vertical tax competition between federal, state, and local governments. Furthermore, as excise taxes, carbon taxes can have a greater distortionary effect on economic activity than do taxes on income, undermining the claims of carbon tax advocates that a tax swap would increase efficiency.

  • A U.S. carbon tax would be irrelevant.

The U.S. is only responsible for around 15 percent of global carbon dioxide emissions. While populous countries like China, India, and Bangladesh continue to grow their industrial capacities—and, as a result, increase their emissions—U.S. emissions have decreased by more than 10 percent since 2005. The only carbon tax with teeth would be one with global reach, which is a nonstarter.

  • A U.S. carbon tax that would replace existing regulations and/or taxes is not politically viable.

A carbon tax that would replace regulations and/or corporate income taxes would fail to satisfy the environmental activist class’s appetite for control. The only carbon tax that stands a chance politically would come on top of onerous regulation and taxation.

Print Friendly, PDF & Email