Voices Rise Across the Spectrum in Favor of Carbon Tax

August 27, 2012

CNN Money

While the carbon tax plan is drawing attention now, the idea itself is not new in conservative circles.

For example, a 2007 paper published by the American Enterprise Institute, an influential conservative group, argued that a carbon tax would be preferable to other ways of reducing greenhouse gases such as mandatory emission limits.

One of the authors was Kevin Hassett, now an adviser to presumptive Republican presidential nominee Mitt Romney. A spokesman for Hassett said he was unavailable for comment. A Romney campaign spokeswoman said the candidate does not support such a tax, saying it would push jobs overseas.


It’s only responsible to force a shift away from fossil fuels by enacting a carbon tax. The U.S., which accounts for about 19 percent of global emissions today, should take the lead in doing so as part of broader tax reform.

The benefits of such a tax are clear: It would raise immediate revenue for a strapped nation, curtail the use of fossil fuels and, as a result, drastically lower emissions. A carbon tax of $15 a ton that rises at 4 percent above inflation annually would raise $310 billion by 2050 and cut emissions 34 percent (or 2.5 billion metric tons), according to a recent report by theBrookings Institution. The biggest hit would come from gas prices, which would initially rise by about 13 cents a gallon and increase gradually from there, according to other estimates.

To avoid one of the biggest downsides of a carbon tax — slower economic growth — as much as 50 percent of the revenue should be used to lower corporate tax rates for all companies. Such an offset could boost economic output by giving business a bigger incentive to invest and hire, research by Brookings and others shows. The remaining revenue should be used to help reduce the federal deficit and make the tax code more progressive, easing some of the bite from higher electricity and gas prices.

Robert Frank in the NYTimes:

The good news is that we could insulate ourselves from catastrophic risk at relatively modest cost by enacting a steep carbon tax. Early studies by the Intergovernmental Panel on Climate Change estimated that a carbon tax of up to $80 per metric ton of emissions — a tax that might raise gasoline prices by 70 cents a gallon — would eventually result in climate stability. But because recent estimates about global warming have become more pessimistic, stabilization may require a much higher tax. How hard would it be to live with a tax of, say, $300 a ton?

If such a tax were phased in, the prices of goods would rise gradually in proportion to the amount of carbon dioxide their production or use entailed. The price of gasoline, for example, would slowly rise by somewhat less than $3 a gallon. Motorists in many countries already pay that much more than Americans do, and they seem to have adapted by driving substantially more efficient vehicles.

A carbon tax would also serve two other goals. First, it would help balance future budgets. Tens of millions of Americans are set to retire in the next decades, and, as a result, many budget experts agree that federal budgets simply can’t be balanced with spending cuts alone. We’ll also need substantial additional revenue, most of which could be generated by a carbon tax.

If new taxes are unavoidable, why not adopt ones that not only help balance the budget but also help make the economy more efficient? By reducing harmful emissions, a carbon tax fits that description.

A second benefit would occur if a carbon tax were approved today but phased in gradually, only after the economy had returned to full employment. High unemployment persists in part because businesses, sitting on mountains of cash, aren’t investing it because their current capacity already lets them produce more than people want to buy. News that a carbon tax was coming would create a stampede to develop energy-saving technologies. Hundreds of billions of dollars of private investment might be unleashed without adding a cent to the budget deficit.

SOME people argue that a carbon tax would do little good unless it were also adopted by China and other big polluters. It’s a fair point. But access to the American market is a potent bargaining chip. The United States could seek approval to tax imported goods in proportion to their carbon dioxide emissions if exporting countries failed to enact carbon taxes at home.

Eliot Spitzer in Slate:

The pace of global warming is accelerating and the scale of the impact is devastating. The time for action is limited—we are approaching a tipping point beyond which the opportunity to reverse the damage of CO2 emissions will disappear.

And what are we talking about in our presidential campaign? Obamaloney and Romney Hood. Silliness has taken over, and the capacity to raise tough issues has dissipated if not gone entirely. Climate change appears to have fallen off the political agenda.

Yet there is an answer for either candidate courageous enough to take the first step. This answer is steeped in conservative economics: Companies that pollute should be taxed so that a product’s cost to society is reflected in the price of that product. Milton Friedman and Richard Posner agree on this point!

The idea, proposed by Hansen, is simple: a fee on carbon emissions collected from fossil-fuel companies, with 100 percent of the money rebated to legal residents on a per capita basis. It is simple, would move us away from carbon-based fuels, would cost most consumers nothing, and would stimulate innovation in the clean-energy sector. Right now, in contrast, we are subsidizing fossil fuels to the tune of hundreds of billions of dollars a year—while the greatest minds in science agree that we are destroying our planet.

It is not a matter of ideology to say that this makes no sense. It is a matter of simple, conservative economics. Is it too much to ask our candidates that in the hot, dog days of August, they trade ideas, not ad hominem attacks?




18 Responses to “Voices Rise Across the Spectrum in Favor of Carbon Tax”

  1. MorinMoss Says:

    This strikes me as one of those things that sounds good on paper but given the financial shenanigans of the last several decades that have cut across lines of business and international borders, I’m concerned that a system like this may not have enough safeguards to prevent someone from stacking the deck.

    Hansen himself is on record as preferring a fee and dividend system.
    I would be grateful is someone could explain the advantages and shortcomings of one system over the other.

    • Alteredstory Says:

      One thing I will say, though, is that even if it IS a tax that is manipulated and so on, it will still signal a slight shift in perception – that GHG pollution is something that DOES need to be dealt with, and while the tax may not be the best solution, we need to have SOME solution, or we’ll run into trouble.

  2. uknowispeaksense Says:

    Here in Australia, all the denier blogs have been harping on about our carbon tax, even to the point where despite it only taking effect on July 1 this year, some were claiming it was having an impact a full year earlier, which of course is just plain stupid. The leader of the National Party, the ultra conservative and idiotic Barnaby Joice claimed it would force mothers to pay “up to $100 for a roast.” For non-Aussies I paid $12/kg for a lamb roast a couple of days ago. The opposition leader, the conservative Tony Abbott has been beating that same drum since the Prime Minister, Julia Gillard announced the tax. Well it seems that rather than being the “wrecking ball” Abbott claimed, the impact of the tax on consumers has been absolutelly minimal and Abbott has had to eat his words.



  3. […] CNN Money While the carbon tax plan is drawing attention now, the idea itself is not new in conservative circles. For example, a 2007 paper published by the American Enterprise Institute, an influe…  […]

  4. […] CNN Money While the carbon tax plan is drawing attention now, the idea itself is not new in conservative circles. For example, a 2007 paper published by the American Enterprise Institute, an influe…  […]

  5. ktorsten Says:

    I’m paying $35/tonne CO2 equivalent here in British Columbia. It’s made me change my behaviour somewhat repecting how I use my vehicle and heat my home. The tax collected is returned to taxpayers by reductions in other taxes, making it revenue-neutral. I consider it a tipping fee, as in when you take your refuse to the garbage dump. For gasoline it works out to just under 7 cents/litre. It’s not high enough in my opinion. And I’m in the middle class, living in the north where the drives and heating season are long.

    Conservatives that can’t figure out this one are a disgrace to the notion of conservatism.

  6. The idea of a carbon tax is an idea that encourages us to think about solving our climate emergency within the framework of market economics. Market-based “solutions” are wishful thinking.

    The former head of the IPCC just said that 2 C cap on global temperatures is unobtainable, and he is hoping we can contain global warming to a 5C increase. While a 5C increase in temperature is devastating, it is also optimistic according to MIT, which predicts a catastrophic 10C increase by year 2100. If we continue with business-as-usual market-based “solutions” we have just signed off on a death sentence for human civilization as we know it.

    We need a national/international emergency solar energy program to construct very large centralized solar installations of sufficient size to operate our total energy requirements using solar power. The economies of scale would be enormous compared to local rooftop installations. If we can cover, say, the Mojave desert with PV, we can – and should – throw away our electric meters.

    We can electrify our highways with inductive chargers, which will allow even today’s paltry auto battery technology to replace internal combustion engines in a matter of a couple of years.

    The amount of national tax dollars we spend on such a project would be large – perhaps equivalent to the amount of money we have squandered on war the past decade – but it would be tiny compared to the costs of adaptation to a 5C or 10C world.

    We NEED to nationalize our electric industry folks, and we need to do it now. Imagine how easily we could accomplish complete energy decarbonization if this was a national imperative – we could do this in five years.

    Just having a serious conversation about this is something that will improve our position. Let’s stop talking only within the framework that Exxon-Mobil would like the conversation constrained. Let’s start talking about the most cost- and time-efficient way to solve this national and global emergency.

  7. andrewfez Says:

    Hey guys,

    In one of greenman’s videos, “Energy Efficiency Part 1”, he says that for one billion dollars spent, it translates to different numbers of energy related jobs, such that the amount equates to 870 jobs for a new coal fire plant, or 1,900 for solar, or 3,300 wind jobs (for local manufacturing of turbines), or 7,000 new jobs related to energy efficiency.

    Does anyone know what the source is for this information? The generic attribute is to C-40 Cities, but they have lots of info to scan over…

    See 11:52 of the following video:

    I need so ammo against the whole Romney Energy Independence by 2020 thing, which on lightly scanning over an article or two, looks to me more like an Alaskan oil party, than a real commitment to sustainable energy, though I haven’t read the details….

    • greenman3610 Says:

      the reference is from a speech Bill Clinton made at a C40 event, but after a number of phone calls to the Clinton Global Initiative, I have been unable to track down the exact citation.
      The numbers, however, are consistent with what we’ve seen for the last 30 years.

      • andrewfez Says:


        Yeah, I found a missive by Clinton on a website, where the numbers and quote were sourced to “Back to Work, by Bill Clinton, p.143-147 Nov 8, 2011”. Next time i find myself at the local bookstore i’ll see if the book is on file, and if the numbers are attributed to something in a possible reference index.

  8. Roger-Exactly. It’s not about economics when wind is cheaper than nukes , but cannot get a subsidy to level the playing field against the giant oil, coal, and gas megalopolies.
    It’s time to end the “all of the above” BS. It’s also time to end the technology can do it all trope. We need fetch to cushion the impact. We also need to find a sustainable balance. What got us here was unsustainable and we now are forced to face the consequences.

  9. […] 2012/08/27: PSinclair: Voices Rise Across the Spectrum in Favor of Carbon Tax […]

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