The Tax Favored By Most Economists

[Sherman A1]

Looking for a public policy that would improve the operation of the economy, lower our dependence on foreign oil, reduce pollution, slow global warming, allow cuts in government spending, and decrease the long-term deficit? Then a carbon tax is what you want. As one of the few taxes favored by economists, carbon taxes could help the nation address several issues simultaneously.

The basic rationale for a carbon tax is that it makes good economic sense: unlike most taxes, carbon taxation can correct a market failure and make the economy more efficient. Although there are substantial benefits of energy consumption, there are also substantial societal costs – including air and water pollution, road congestion, and climate change. Since many of these costs are not directly borne by those who use fossil fuels, they are ignored when energy production and consumption choices are made, resulting in too much consumption and production of fossil fuels. Economists have long recommended a tax on fossil-fuel energy sources as an efficient way to address this problem.

Not surprisingly, most analyses find that a carbon tax could significantly reduce emissions. Tufts University economist Gilbert Metcalf estimated that a $15 per ton tax on CO2 emissions that rises over time would reduce greenhouse gas emissions by 14 percent. Another study estimated that the European countries’ carbon taxes have had a significant effect on emissions reductions.

Although a carbon tax would be a new policy for the federal government, it has been implemented in several other countries (though not always in the manner advocated by economists), including the Scandinavian nations, the Netherlands, Germany, the United Kingdom, and Australia. The Canadian provinces of Alberta and Quebec adopted carbon taxes in 2007, followed by British Columbia in 2008. Meanwhile, California, the 9th largest economy in the world, has recently initiated a cap-and-trade system, which auctions carbon permits to companies.

http://www.brookings.edu/research/opinions/2013/03/12-taxing-carbon-gale

[daybranch]

1. Who pays

the poor again would be disproportionately hurt in this country. How about just taxing the rich based on all income at rates over 40 percent, instituting tougher standards and hiring thousands to enforce them with the additional income from the rich. Would this not work just as well, and not burden those who can least afford to pay.

[Turbineguy]

2. It does not have to be the only tax

and it would be a burden on those who have lifestyles of "wretched excess".

[Demeter]

3. A much bigger burden on those who live lives of wretched want, I think

Taxing is a stupid way to change society. Regulation is the proper way to go, with no exceptions for corporations. If the corporations are properly and equally and fairly regulated, most financial problems go away, as well as the pollution problems.

Then add in mass transit and other social programs to decrease energy use, and it's all solved without all that money sloshing around, corroding the political process.

[kristopher]

8. I don't think you have a solid grasp of how regulating behavior actually is.

Do you seriously think that ironhand enforcement of one-size-fits-all regulation is an effective approach to solving social problems?

That is what resulted in the worst failures of the Soviets and the Chinese. Central control has limits. Failing to recognize where those limits are is how bad policy is made.

A carbon tax is unquestionably the very best approach for our current set of problems.

[Demeter]

9. Most Economists Are WRONG

and THAT is historical fact. They work from models that are designed to suit their masters.

Clue: it's not people, but corporations who are the masters.
Who are the biggest tax cheats in the country? Corporations.
Who does all the political Corruption? Corporations.

Who is going to game the carbon tax for gambling wins? Corporations.

If you want to live as a corporate thrall, by all means, give them another tool of oppression. The Carbon Tax has already failed spectacularly in Europe. Let's do it there, too. Why learn from other people's experiences?

This is NOT a social problem. This is an allocations of the commons--and taking the commons back from the profiteers. That's a political power problem.

[kristopher]

17. You make as much sense as a tea-partier saying "keep government out of my social security"

[Demeter]

18. And You are supporting the Brookings Institute!

Some liberals argue, however, that despite its left-of-center reputation, Brookings foreign policy scholars were overly supportive of Bush administration policies abroad.[29][30] Matthew Yglesias, a liberal blogger, has pointed out that Brookings's Michael O'Hanlon frequently agrees with scholars from conservative organizations such as the American Enterprise Institute, The Weekly Standard, and the Project for a New American Century.[29] Similarly, Brookings fellow and research director Benjamin Wittes is a member of the conservative Hoover Institution's Task Force on National Security and Law.[31] Brookings scholars have served in Republican and Democratic administrations, including Mark McClellan,[32] Ron Haskins[33] and Martin Indyk.[34][35]

The Brookings Board of Trustees includes mainly prominent Democrats, such as Laura Tyson, former chair of the Council of Economic Advisers under Bill Clinton, but also a token number of centrist Republicans such as Kenneth Duberstein, a former chief of staff to Ronald Reagan.--wikipedia

In other words, not progressive, not populist, and not your friend nor mine....

[kristopher]

20. Wow.

Nice, meaningless rant that is a spectacular success at totally failing to make a lick of sense. I mean, you have to work really hard to get ideas as fouled up as you have done with this.

ETA: Seriously Demeter, you have your facts wrong. If you give a shit about climate change and doing something to change the trajectory we are on, you'll invest some time in a couple of online course that introduce you to the fundamentals of economics. It is a toolkit of ideas, nothing more. Demonizing it is like demonizing calculus or chemistry. You come of looking a lot worse than you can possibly image.

Go in peace my friend. I know your heart is in the right place, but it takes throwing some grey matter into the mix. If you don't, all you are doing is serving the interest of what I would argue are some of the 'evil' corporations the world has ever produced - those dealing in fossil fuels.

[Demeter]

21. I see no ideas except corporate propaganda there

Which bankster do you work for?

[stevenleser]

25. Which Koch brother do you work for?

These are such ridiculous posturing accusations.

[stevenleser]

24. Guilt by association is a logical fallacy. nt

[kristopher]

6. Most programs rebate carbon tax money to low income earners

The idea isn't to make this echelon pay more for living, but to make them (and everyone else) more aware of the way they spend their energy money. In theory, with a rebate for energy used in hand lower income households would be in a better position to invest in alternatives to fossil fuels - such as home energy efficiency upgrades, more fuel efficiency cars, or home solar systems.

Your proposal might work for a while, but how long do you think it would last until whatever miraculous political will that enabled it to pass was lost and the entire thing was repealed? A carbon tax rebating to the poor would only lose its political support as the poor increasingly stop using carbon.

[MadHound]

4. I'm sorry, but a carbon tax is just more rewarmed Republican tripe.

It is the uber-capitalist's way of dealing with climate change, because it allow for a carbon credit market to be set up, where credits can be bought and sold, and ultimately, since the tax can be passed on to the consumer, the ones who wind up paying for the carbon tax are the middle class and the poor.

Furthermore, the reason that Europe's emissions have been reduced isn't a carbon tax, but the fact that all across Europe there has been a major investment in wind and solar, d'uh. Which is exactly what we need to do. That would reduce emissions far faster than a carbon tax.

[kristopher]

7. No,it isn't. It is solid Progressive policy.

If you can't recognize the need to work with economic tools as a means of dealing with climate change, then frankly, your opinion isn't worth a bucket of warm spit.

[MadHound]

14. No, it isn't,

Carbon credits were created by Ken Lay, of Enron fame, in cooperation with leaders from Goldman Sachs and other such institutions. Here are some article for you to peruse, showing why carbon credits don't work.
http://www.wired.com/science/planetearth/magazine/16-06/ff_heresies_07trading
http://www.technologyreview.com/view/410009/why-carbon-credits-dont-work/
http://sustainabledevelopmentnow.blogspot.com/2007/01/problem-with-carbon-credits.html

Carbon taxes are passed on to the consumer, which means that the poor and middle class wind up paying for the deeds done by the rich. That simply isn't fair.

You want to work with economic tools, I agree. Tell you what, let's remove the subsidies from oil, coal and other fossil fuels, and apply some of those to green renewables. Hell, you don't even to apply those subsidies to green renewables. Just allow the free market to work. With minimal subsidies, wind and solar have become very competitive with fossil fuels, to the point where they are way cheaper than nuclear power, and competitive with heavily subsidized fossil fuels.

That's how you let economic tools do the job, not creating false markets that allow speculators to rule the roost.

[kristopher]

16. We are talking about a carbon tax, not carbon credits.

And it is a solid Progressive policy.

[MadHound]

29. Did you read my post at all?

Here, let me quote from it, OK.
"Carbon taxes are passed on to the consumer, which means that the poor and middle class wind up paying for the deeds done by the rich. That simply isn't fair."

That's not solid progressive policy, unless you believe that solid progressive policy includes screwing over the poor and middle class.

Why don't you go back and read my entire post, I include a solution that is solid progressive policy.

[Demeter]

10. Thank you, MadHound. You said it much better than I did.

[reformist2]

5. The #1 tax we should be talking about is the wealth tax.

While everyone seems to figure out the best and fairest way to tax income or sales, it's amazing to me how few ever talk about taxing wealth.

[stevenleser]

11. I've talked about it and written suggestions on it. But I also know how tough it is to implement.

And there is a major risk that the wealthy will simply leave and set up residency in a low tax country like what recently started happening in France in advance of the proposed income tax raise there.

It takes about 2 minutes for most wealthy people to move their money from a US bank to a foreign bank, and another 15 minutes to set up a private jet to fly them there. Unless we are going to lock down the airports and make sure people have paid their taxes before they depart (I know countries that do this and the effect is chilling) it is very hard to enforce a wealth tax.

[Demeter]

19. Let them leave

We'll have much better government and fewer wars. And we can tax the hell out of them on their way out.

[stevenleser]

22. Both of those are easier said than done.

A few mouse clicks, and a wealthy persons assets are in foreign banks. A few minutes later, they are leaving the country on a private jet from a small regional airport. No one is going to stop them.

And you understand that the top 10% has 80% of the country's wealth, right? If that amount or close to it is gone, we go from a country with $54 trillion in wealth to a country of around $10.8 trillion in wealth overnight.

But guess what? We still have the same debt. Our debt doesn't go away with them. We have no chance to pay it and basically would go bankrupt. We would have no way to pay Social Security and Medicare or Medicaid for the people who remain.

Those are just the beginnings of the problems with this. There are many more. Understand that I once proposed a wealth tax.

The process that is better is to raise the tax on dividends for people above a certain income and raise the top tax rate for wages.

[oldhippie]

28. Yeah, that worked out well for Detroit

NOT

[Lurker Deluxe]

12. Taxing wealth is great

Until someone decides that you have to much and wants to tax that.

It would start with a tax on wealth over a billion, but there are like 450 people with that kind of money. So it would move to 500 million, catch another 4000 people. How much of it are you going to take? 5% .. doesn't amount to squat. Is this every year that you tax this wealth? Because you will get it the first year, the second year it will be gone, divided up among LLC's holding just enough to stay below the value that you will attempt to tax. How do you decide how to tax that? Family wealth? Will not be long until someone says you have to much.

Taxing wealth will not tax the wealthy.

[Lurker Deluxe]

13. gibberish

I would compare this to the idjit people who set our corporate goals for the year. Every year the goal is to us 15% less electricity.

The recession hit and these idiots were all jumping for joy, "we're using less electricity" we are successful. Dolts.

The economy has been coming back since the low point and we have been consuming more and more electricity every year since then. The last quarter of 2012 being the largest bill ... until they see this quarter. These dolts actually stood up in the front of the group in our town hall meetings and distressed over the fact that our electricity bill is going up.

You can change that thermostat all you want, and you can go buy some more efficient light bulbs you dim wit, that 75,000 pound machine wired into 440 3 phase 100 amp circuit is running 10-12 hours a day ... the one next to it running too. Consuming more electricity is good, not bad.

Why would we want to put yet another tax or regulation on manufacturing? Are we really trying to keep any jobs here? Make the generation of electricity more efficient and greener ... but let's use the hell out of it.

[Jim Lane]

15. Those of you denouncing a carbon tax -- do you favor repealing the gasoline tax?

Our tax on gasoline has the good effect of using market mechanisms to discourage gasoline use. (When gasoline is more expensive, people tend to drive less, and they have more incentive to car pool and to buy more fuel-efficient models. In the longer term, expensive gasoline creates a more favorable economic environment for mass transit.)

It also has the bad effect of being regressive, of tending to fall more heavily on people with lower incomes. (They pay a higher percentage of income in gasoline tax, although the very poor, who can't even afford a car, pay nothing, at least not directly.)

IIRC, in the 2004 campaign Kerry was pilloried by the Republicans for having supported a 50-cents-per-gallon increase in the gas tax some years earlier. Of course, if that had been done, we would be using less gas now, and the decreased demand would have put some downward pressure on prices at the pump. Prices would be higher than they actually are but they wouldn't be 50 cents higher.

The stark fact is that we're burning irreplaceable petroleum deposits at an unsustainable rate. We need to reduce our use of fossil fuels. Just about any measure to do so will, if examined in isolation, affect the poor more than the rich. We need to implement such measures while making offsetting changes (lift the FICA cap, greater progressivity in income tax rates, etc.) to address the different but related problem of income inequality.

[kristopher]

26. Most plans include rebates to low and middle income households.

It makes them more conscious of their energy usage, and gives them some seed money to do something that will lower their energy bills.

[stevenleser]

23. I am in favor of a carbon tax as I have said publicly

for the environmental reasons and the revenue reasons

[kristopher]

27. Any informed person who cares about climate change...

...and the economy supports it.