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The Public Policy
A Carbon Copy of a Bad Idea
Cap-and-tax was bad enough — we don’t need a carbon tax, backed as it is by those who wouldn’t have to pay it.
With the exception of an attempt by New York Mayor Bloomberg to divert attention away from his city’s woeful lack of disaster preparedness, global warming didn’t rate a mention in the presidential election campaign — but it returned soon after with a vengeance. Karl Rove hadn’t stopped arguing over the Ohio result when various voices affiliated with the losing party (such as several scholars from the American Enterprise Institute and Greg Mankiw, a Harvard economist who advised Mitt Romney) began suggesting that a carbon tax was a really good idea going forward. There are good reasons for conservatives to contemplate how their approach to young single women, gays, and immigrants might have contributed to recent defeats, but there is no reason to think that a switch on energy policy — which is really economic and industrial policy — might help. A carbon tax would punish the middle class and harm the broader economy now and going forward. It should be defeated the same way as cap-and-tax was defeated.
The first argument advanced in favor of a carbon tax is that it would help reduce emissions that allegedly cause global warming. This is why NASA atmospheric scientist James Hansen occasionally moonlights as an economist to push a carbon tax. Yet a carbon tax that is set high enough to significantly affect emissions would be devastating to American household budgets. A lower carbon tax will have no noticeable effect on emissions.
As Chip Knappenberger of New Hope Environmental Services recently demonstrated, even a complete elimination of U.S. carbon emissions today would not detectably affect global temperatures or sea level in 2050 or 2100. Only a globally harmonized carbon tax could do anything to reduce emissions to the levels which alarmist scientists say are necessary, and the experience of the failed Kyoto Protocol shows that developing nations will not accept anything that reduces their prospects for economic growth. Therefore, a U.S. carbon tax will not do anything to stave off or even mitigate whatever threat global warming might present.
The second argument advanced in favor of a carbon tax is that it could be revenue neutral, replacing another tax, such as the payroll tax, and thereby moving us from taxing a “good” activity — labor — to taxing a “bad” one — emissions. Yet studies show that a carbon tax is highly regressive. This is because the costs of a carbon tax are ultimately borne not by the emitters, but by their customers, employees, and investors. This is why several energy company CEOs have lined up behind the tax. They don’t pay it. The automobile driver pays the tax when she fills up at the pump. The worker pays it when he opens his paycheck. The retiree pays it when she receives her pension check. The carbon tax does not in the end tax waste, but productive behavior.
One recent study that looked at the effects on consumers of carbon tax found that the costs — largely in the form of more expensive gas and electricity — would be up to eight times greater for the poorest families than for the wealthiest. This means that in order for even a revenue-neutral carbon tax to be fair, far more tax revenues would have to be diverted to the poor to make up for the effects of the tax than is currently the case. That in turn means significant cuts in some government services to make up for the newly diverted revenue.
But now, with the fiscal cliff fast approaching, some have abandoned these arguments and instead are pushing for a carbon tax as a revenue enhancer. A price on carbon of $15/ton, which is generally bandied about as a politically feasible starting point, would yield about $80 billion in extra revenue. Yet the size of the fiscal cliff is some $560 billion. To solve that problem by means of a carbon tax would require a carbon tax of over $100/ton, and costs to the average household in terms of increased energy costs of over $2,000 per year. That represents not so much a fiscal cliff as a fiscal brick wall for the average American. Even that might not be enough.
Returning to the subject of global warming, in 2009 in Copenhagen, President Obama promised developing nations that Western countries would provide a fund of $100 billion annually to help alleviate the effects of global warming. If the President intends to keep that promise, with Europe in disarray thanks to the Euro crisis, most of that burden will fall on America. A carbon tax could quite easily end up in Asia or Africa without America seeing a cent’s benefit.
None of these facts have changed from the cap-and-tax debate. Forces like Exxon Mobil are now lining up behind a carbon tax — because they would not have to pay it. Conservatives should remain true to their principles and oppose this carbon copy of a bad idea.
About the Author
Iain Murray heads the Center for Economic Freedom at the Competitive Enterprise Institute and is the author of Stealing You Blind: How Government Fatcats Are Getting Rich Off of You.
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Bill Hussein O'Stalin| 11.19.12 @ 7:08AM
Bad ideas are welcome in Washington.
There are several criteria to judge those bad ideas.
Will they cost politicians votes? If no, go to next criteria.
Is the public stupid enough to not grasp they are being screwed? Go to next criteria.
Can we get the money and blow it and not reduce spending? That's the final criteria.
If a bad idea can get past these three elements then it's on to the party.
Bob K| 11.19.12 @ 6:45PM
Look! A Carbon Tax is the same thing as a "Value Added Tax" which Europeans put on everything that is manufactured. Read the 4th paragraph of this article. The end user pays all of it. The manufacturers pass it all on to the consumers.
Carbon Tax advocates are trying to hide this under the argument that it will benefit the economy.
Mr. Murray knows that too! I wonder why he didn't identify it as such?
Bob K| 11.19.12 @ 6:47PM
Make that 2nd paragraph, "benefit the environment."
TLP| 11.19.12 @ 7:10AM
Our Forefathers, for all of their Genius, and all of their Forthrightedness, did what I do all the time.
They forgot something.
They stood up to the Most Powerful Country on the face of the Planet, and won. They put forth a Republican form of Government, not seen since the Early days of Ancient Greece, and Ancient Rome. The "Actionable" word being - Ancient.
They set up a New Model of "Limited Government", consisting of Three Separate, yet Equal, Branches of Government. One to Check the other, who would, in turn, check the other, and so on, one more time.
I could go on for an hour, on the things they DID do, so I will. And, yadda yadda yadda........they seemed to have gotten Everything Right, while forgetting the most important thing - The Nature of Men. The Nature of the Beast.
These were Religious Men, of sorts, yet they didn't factor in the feint whisper in the ear from the Prince of Lies. The Great Tempter. The Destroyer of Men's Souls.
"Lead us not into TEMPTATION."
John Adams warned about the need for Good People, if all of this was gonna work, but left out the only Stopgap that might have lessened the Havoc that such Bad Men could create, should they ever grab hold of any kind of Power.
Term Limits.
And I know all about "Amendments for these kinds of things". Please. It took THREE VOTES at the DNC to get GOD's name back in their Platform. Ya think that anyone can get a Constitutional Amendment passed, today?
Von Mises Jr| 11.19.12 @ 7:28AM
What good are Constitutional Amendments when we no longer adhere to the Constitution?
We are now finding out why the Founders designed States Rights as the Senate no longer represents the States. The Income Tax and Federal Reserve were only instituted one-hundred years ago and they have destroyed liberty through redistribution and socialism. Social Security is a Ponzi scheme with $2.5 trillion in IOU's to us and operating at a $100M loss. Now we have ObamaCare and Dodd-Frank that fundamentally change the relationship between the citizens and our former representatives whom are now our RULERS?
A Carbon Tax is just another socialist redistribution scheme to allow our Ruling Class to centrally plan picking winners and losers. If the perpetual losers don't speak up soon, they will be the new Serfs.
Tocqueville wrote how the Nobles and Intellectuals sparked the French Revolution to repeal the "Industrial Revolution" and re-instate serfdom. The Carbon Tax along with massive regulations are close to succeeding in this 250 year battle.
TLP| 11.19.12 @ 7:35AM
This last election has proven the degree of Degradation that we have sunken to, with Saddam Hussein numbers in the African No Go Zones of Philadelphia. The African Areas of Houston, Chicago, and wherever they still like to fly the ANC Colours. Each one of them having been turned in to little Fiefdoms, and ruled over by the same kinda groups that always take control in the Movies, after an Apocalyptic Event. Or, like "The Gangs of New York".
We do live in Two Americas. One for the Rulers. One for the Ruled. One for the Martha Stewarts, and one for the Charlie Rangel's. One for the Bernie Madoffs, and one got the MFing Global John Corzines.
We do not live in a place with Equal Protection Under the Law. There are No Checks, and No Balances, anymore. Only Taxpayers and Tax Collectors.
History proves that you can only stretch the rope so far, before it Snaps.
Then the Shooting starts.
And, to think that it all could've been prevented with a little thing like Term Limits.
pogybait| 11.19.12 @ 9:26AM
You mean degradation, by the elected officials, academia and media….. the very people who view the Constitution as a living document to corrupt along with government bureaucrats who work for some of the worst form of public agencies. The type that pushes their agenda quietly taking us back to some believed idyll of existence, encroaching with stealth upon our liberty and freedoms in the name of fairness and political correctness. It's no stretch of the imagination, that in a short amount of time we will be able to watch a deliberate economic sclerosis, as these effects will stymie the military, local law enforcement and municipalities …...by design.
benny havens| 11.19.12 @ 7:29AM
And the lies continue. “I will not raise taxes on people making less then $250K”, as the money is funneled to “green companies” like Al Gore’s and campaign contributors.
TLP| 11.19.12 @ 7:43AM
Look at the bright side.
He doesn't have to Lie, anymore.
Now I am become Death. The Destroyer of Worlds.
That's where we are, this morning.
And, it's only just begun.
c. j. acworth| 11.19.12 @ 8:11AM
I'm no longer calling my broker to ask about investing in this or that company, I'm buying freeze-dried food and ammunition.
TLP| 11.19.12 @ 8:49AM
Congratualations.
You get it.
Who needs Gold, when you've got Food, Water, Generators, Fuel, Weapons and Ammunition?
In the Land of the Blind, the One Eyed Man is King.
Louis Jenkins| 11.19.12 @ 9:27AM
Amen acworth. Amen.
Cobalt| 11.19.12 @ 8:46AM
"There is another social development rarely discussed."
BUCHANAN: THE COMING AGE OF AUSTERITY
By Patrick J. Buchanan
http://www.humanevents.com/201.....-austerity
Louis Jenkins| 11.19.12 @ 9:30AM
The coming age of austerity is already here. At least at my house it is. The electric heat has been on only three times this fall. The woodstove is going all the time. I guess we'll have heavy coats on in the house this winter. Taxes, it's the new health food, for the Federal government.
MikeW| 11.19.12 @ 10:18AM
Oh, please. $15/ton of carbon would add 4 cents to the price of a gallon of gas. For this you get all hysterical about regressive taxes and fiscal brick walls for the average American? And nobody's talking about using a carbon tax to singlehandedly erase the federal deficit.
I agree taxing carbon wouldn't affect global warming, whether you believe in the climate models or not. But as a new tax revenue stream, I'm all for it. Let's face it, fossil fuels are a finite resource. A carbon tax would be a gentle push for folks to pay more attention to their energy consumption habits.
mike 3/505| 11.19.12 @ 12:06PM
Demanding a balanced budget that only pays for the constitutional functions of the federal government, would be a much better way to get our rulers to fix the mess in DC
Occam's Tool| 11.19.12 @ 12:30PM
At $4.00/gallon at times, I think they do. Plus, this tax is regressive, and hits the poor worst.
I love the consistency and care of the poor we get from Liberals.
Tom Kyba| 11.19.12 @ 12:52PM
Please come to Canada. Your attitude fits in perfectly up here comrade.
John Navratil| 11.19.12 @ 5:33PM
MikeW,
How about a $15/liberal tax. It's a new revenue stream. I wouldn't pay it. It would be a gentle push to liberals to become conservative.
Who Knows?| 11.19.12 @ 12:03PM
The “permanent campaign”?
Where have I heard of THAT?
Why, wasn’t it Bill Clinton who famously spent 8 long years mostly campaigning, and doing some governing? And, NOW, we have the next iteration of Obama, who’s accentuated the campaigning and decreased the governing.
What does that tell you?
Look, the permanent government has passed the tipping point, and there’ll be no going back---short of a cataclysmic political or natural or economical disaster. And, I continue to believe there’s going to be a massive economical correction, that will make the real estate write down look like small beer.
All any future Democratic Party leaders know to do is COPY Obama and Clinton, because their compatriots in the liberal power pyramid will only need cover to continue their permeating takeover of the economy. We are getting to experience fascism, American hate style.
And, the American stupid party, the GOP, has leaders who resemble the farmers who brought on the Dust Bowl. When confronted by worsening problems, they double down on their loser strategy!
Demographics is destiny. So, bring on the illegals, let’s have them vote—for more government as taker!
You can only weep, and marvel in horror at the slow dance of death of America, soon enough to be a fast step off the freedom cliff.
JD| 11.19.12 @ 1:21PM
Democrats have learned that if they make it harder to do business in America, they can blame businesses for the resulting pain felt by individuals, and the public will believe them. They will milk this lie to no end.
John Navratil| 11.19.12 @ 5:33PM
"The carbon tax does not in the end tax waste, but productive behavior."
This is the essential statement. It is so because productive behaviour inevitably involves the consumption of energy.
Stan Redmond| 11.19.12 @ 6:49PM
And the best thing about this big government program and tax, we can always make another government program and tax to fix the problems this will call.
stmichrick| 11.20.12 @ 10:33AM
We can all argue about the economics of it and the projected effect (per pound).
Let's not forget that man-caused climate change is all based on fabrication (oh, sorry; 'theories') and real scientists need to hammer home that there is no evidence of a crisis that is not counterbalanced by an opposing natural event and that, given historical geologic perspective, the activities of man can change the temperature of a planet. Glaciers have melted since the beginning of time but we cannot seem to deal with this avalanche of BS (by the ton).