A carbon-tax swap? - Macleans.ca

A carbon-tax swap?

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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.