Anything worth talking about, is worth blogging about

An editorial in the New York Times got me thinking about why a carbon tax is a better way to fight global warming and climate change than either cap–and–trade or efficiency regulations.

Here are several reasons I can think of:

  • Carbon taxes always provide an incentive to pollute less and use less energy. Even if you cut carbon emissions by half, you still are paying taxes for the carbon you do emit, and therefore still have an incentive to eliminate it. Compare this with efficiency regulations, where someone has no incentive to reduce energy use once the regulation is met. In addition, all too often regulations are designed by businesses themselves, so as to prevent competition (rent seeking). Also compare this with cap–and–trade, where a source of carbon credits may well allow heavy polluters to continue, just because they have deep pockets. A lot of money will not allow someone to avoid paying a carbon tax.
  • Carbon taxes drive both individuals and companies to use less energy. Cap–and–trade is usually done by businesses, and efficiency regulations only impact new products (unless old ones are mandated to be destroyed).
  • According to the editorial, a carbon tax is far cheaper than efficiency standards once a global view of costs is taken into account.
  • Carbon taxes (especially those on fuel) make people drive less and live in denser environments. On a per capita basis, cities are more energy–efficient than suburbs. For example, recycling and public transit are more feasible in densely–populated areas. And people who drive less are less sedentary and therefore healthier.
  • It is possible that cap–and–trade and efficiency standards alone will not do enough to mitigate climate change.
  • A carbon tax is easier to offset as part of a green tax shift than other methods. It can even lead to lower tax levels overall, such as here in British Columbia (cite).
  • Efficiency improvements are subject to the rebound effect, where the decreased cost of using a resource partially offsets gains from using it more efficiently. A carbon tax does not generate perverse incentives.
  • A carbon tax is easier to adjust. If too many pollution permits are issued, cap–and–trade will not have much of an effect since it is harder to eliminate privately–owned pollution permits.
  • Many countries that export oil are rentier states, which means that they earn most of their revenue from natural resource royalties. Those royalties pay for oppressive paramilitary forces that enforce authoritarianism in those countries. A carbon tax will eventually reduce revenues received by those countries, improving freedom there and those countries’ human rights situations.

Hence, for all of the above reasons, a carbon tax is the way to go. My preferred offset is to payroll taxes. But such has virtually no chance of being enacted in the United States (a better chance in Canada [I hope]), due to the extreme polarization and total irrationality (and far worse!) of a number of politicians there. And since climate change is a major danger, Christian conservatism’s climate change denialism makes it, in the long run, the world’s most dangerous ideology.


Comments on: "Why a carbon tax is the way to go" (4)

  1. I don’t want to see a tax on fuel. It will fuck a lot of lower-income people’s lives up. The reason why is because the parts of cities that are safe places to raise kids in tend to be much more expensive than equivalently “nice” rural areas. And also because a lot of people can’t move easily–they have a job they can’t afford to lose, or kids who love their local friends and teachers, or the depressed local housing market has made a home sale near-impossible. So the result will be people paying a higher percentage of their income on gas to get to work, and making up the difference by cutting out things like trips to visit family (which you probably think is good because it decreases car use, but it also decreases happiness), or evenings out, or organic groceries, or not being able to cut out anything and going into debt or worse. Also, more people moving to cities will drive up rents, which means that landlords will use all kinds of dirty tricks to push lower-paying tenants out. Those for whom higher gas prices means having to move into a ghetto urban neighborhood will not be healthier for it, either, due to the kind of environmental racism that’s given the Bronx some of the highest asthma rates in the US.

    • Giving a rebate will resolve your concerns. Consider the following:

      Call X the minimum income necessary to live at the poverty level.

      Call Y the amount of carbon tax someone at the poverty level would pay (including both direct payments and indirect payments hidden in the cost of goods and passed on to you by businesses).

      Give everyone X+Y as a minimum income (spread out over the year of course [for example, weekly payments]). The minimum income can replace food stamps, welfare, unemployment assistance, and other of income assistance can be eliminated (since they are replaced with the minimum income X+Y). At the same time, either enact an income tax (with all deductions and exemptions, etc. eliminated [namely, all income, regardless of source]) at the same rate. Such a system is known as a negative income tax. Although technically a flat tax, since everyone gets the minimum income payment (which can offset all or part of the tax paid) in practical terms such a system is completely progressive.

      It has a number of advantages over the current taxation regime, including but not limited to:

      *It’s simpler. If you can do arithmetic and percentages, you can do your taxes.
      *It allows the consolidation of a number of government services, allowing a smaller and more efficient government.
      *The minimum income makes the loss of a job easier to weather. For example, if your employer (or landlord) is screwing you, it’s easier for you to quit your job, since the loss of income from being out of work won’t be so devastating. You are less “locked-into” a job, and can therefore handle the transition to a new one better. (Making health insurance and retirement benefits “portable” and not attached to your job would accomplish the same thing.)
      *It eliminates the welfare trap. Since there is never a clawback, you always have an incentive to earn more money.

      The carbon tax refund (the Y part of X+Y) offsets the carbon tax you pay. You therefore end up in the same position financially, while at the same time action is being done to help prevent global warming.

      • Thanks for reply. Definitely for minimum income…would force employers to stop treating workers like shit, and allow creative people more time to create great things.

    • Alternatively, a value-added-tax (VAT) could be used instead of an income tax. In this case, the Y part of X+Y would be the amount of VAT someone at the poverty line would pay.

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