The carbon pricing debate in the United States -

The carbon pricing debate in the United States


In 2007, economist Greg Mankiw wrote an op-ed for the New York Times to argue for a carbon tax. Mr. Mankiw is now an economic advisor to Mitt Romney. Mr. Mankiw is, in fact, among three advisors to Mr. Romney who have advocated carbon pricing (though Mr. Romney officially opposes a carbon tax).

A spokesperson for the candidate’s campaign, meanwhile, did not mince words: “Governor Romney opposes a carbon tax,” she said. A stand-alone tax on carbon will never fly with Republicans, economists and analysts say. But one that is pitched as a single dish in a buffet of tax reforms just might, says Arthur Laffer, an economist who worked in the Reagan administration during the last major reform of the tax code in 1986.

“The one reason why we all just go dingers and hate carbon taxes is because it’s a tax add-on,” Laffer said in an interview. “It’s an additional tax and an additional encroachment of government on the private sector and will actually hurt the economy. That’s a real problem. So therefore, if you can find another tax that is worse than a carbon tax and replace that tax with a carbon tax, I don’t know of many people who would disagree with that.” Laffer called income taxes the “single most damaging tax that you can imagine,” because they penalize nearly every American for contributing to the economy.

Democratic Congressman Jim McDermott has introduced carbon tax legislation and former Republican congressman Bob Inglis is advocating for a carbon tax. Ezra Klein has a dream that carbon pricing will be part of a grand bargain between Democrats and Republicans. Matthew Yglesias recently made the case again for taxing carbon.

Both Barack Obama and John McCain proposed cap-and-trade during the American presidential election in 2008, but cap-and-trade legislation stalled in the Senate.