A carbon-tax swap?

by Aaron Wherry

In the United States, the carbon tax discussion continues.

From the National Journal.

Over the next two years, the president will have one more chance to push carbon-pricing legislation through Congress—this time, however, with a distinctly different political profile. As early as next year, Congress is expected to take up a sweeping tax-reform package that would lower corporate rates and eliminate loopholes in the tax code. As part of that process, support is growing for a carbon tax, to be paired with a cut in the payroll or income tax. The strongest supporters of the idea are conservative economists—including Gregory Mankiw, Mitt Romney’s economic adviser; Douglas Holtz-Eakin, who advised Sen. John McCain’s 2008 presidential campaign; and Art Laffer, President Reagan’s chief economic adviser. Republicans want to find a way to cut taxes on work or income—and many, at least, don’t oppose the idea of moving that tax over to carbon pollution.

The idea taking shape is to tuck a “carbon-tax swap” into a broader reform package, framed as conservative fiscal policy and championed by Republicans. That could provide the political cover it would need to get through Congress, although it will still require an uphill push. One big challenge will be to get enough Republicans, and many coal-state Democrats, to  sign on to something that will inevitably be labeled an “energy tax” by groups like Americans for Prosperity, the super PAC linked to the oil conglomerate Koch Industries.

From the Washington Post.

Here’s a riddle: If Congress doesn’t want to raise income tax rates but wants to raise revenue, what can it do? One answer: Pass a carbon tax.

A relatively moderate-sized carbon tax could raise $1.25 trillion over the next decade, a huge chunk of the money needed to bring the federal budget deficit under control. And the idea is getting a closer look now that the election is over and the “fiscal cliff” is looming.

A White House official says the President isn’t planning to propose a carbon tax.




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A carbon-tax swap?

  1. If they hadn’t been so stupid as to make science and climate change political in the first place….they wouldn’t need all these disguises

  2. “As part of that process, support is growing for a carbon tax, to be paired with a cut in the payroll or income tax. The strongest supporters of the idea are conservative economists …. ”

    America doesn’t have a VAT/GST yet and they might tax ‘carbon’ instead.

    Wherry What is really farcical about this whole debate – leaving aside the fact that the world isn’t warming and that we want the climate to change, it would be much more alarming if the climate wasn’t changing – is that if Stephen Harper and his minions really wanted to help the economy grow, Cons would increase excise and other sales taxes and decrease income and corporate taxes. Dion’s Green Shift was right wing economics.
    ————–
    Tim Worstall ~ Daily Telegraph:

    We’ll have to raise VAT as well, of course: for this is something that people don’t seem to realise about Nordic tax systems ….. This is because those countries follow the basic economics of taxation. You need low corporate and capital taxation, moderate income taxation and high taxes on consumption.

    As the OECD helpfully points out, all taxes have deadweight costs. These are economic activity that doesn’t happen because of the presence of the tax. Different taxes have different deadweights. The aim is obviously to collect the money you need while destroying as little economic activity as possible. For the amount of money you collect in tax, property taxes destroy the least activity, consumption taxes a little more, income more than that and the most destructive are taxes on capital and companies.

    http://blogs.telegraph.co.uk/finance/timworstall/100016459/lets-give-polly-toynbee-the-britain-she-wants/

    • I continue to find it funny that your posts go back and forth between bashing economists and the social sciences, and posts where you support policies agreed upon by economists (I.e. lower income/payroll taxes, raise consumption taxes)

      Have you ever been diagnosed with multiple personality disorder?

      • I same as everyone else – people who agree with me are clever and people who disagree with me are dim bulbs. Many social scientists are left wing who peddle lamarckisms, at best, and so they are mostly charlatans but occasionally economists and other social scientists find something useful.

        • I’ll remember this post next time you say economics is a sham. You seem now to be saying it’s not economics that’s bunk, just certain economists.

          By the way, congrats on knowing everything. If everyone who disagrees with you is a ‘dim bulb’, you must certainly know all.

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