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Carbon tax proposal by left-right coalition sparks backlash



Carbon tax proposal by left-right coalition sparks backlash

From Daniel Wiser's column in The Washington Times:

Continuing discussions about the carbon tax have sparked a backlash among other conservative policy analysts. Marlo Lewis, a senior fellow at the Competitive Enterprise Institute — another conservative think tank — dubbed the coalition the "carbon tax cabal" and included the agenda for the meeting in a blog post.

The agenda, titled "Price Carbon Campaign/Lame Duck Initiative: A Carbon Pollution Tax in Fiscal and Tax Reform," designated the policy discussion as the fifth such meeting of the groups. Participants included officials from AEI, free-market think tank R Street, the Center on Budget and Policy Priorities, Taxpayers for Common Sense, the IMF and Al Gore's Climate Reality Project.

Lewis' post also included a memo from Myron Ebell, director of CEI's Center for Energy and Environment, lambasting the carbon tax proposal as ineffective and bad politics:

We defeated capntrade in 2009-10 by convincing the American public that it was really capntax. Twenty-odd House Democrats who voted for Waxman-Markey lost their seats. The Democratic Senate refused to take it up. It's political poison, so naturally the more brain-dead parts of the Republican and big business establishment have decided how clever it would be to resurrect the carbon tax and push it as an alternative to regulation. I don't notice anything in the AEI agenda about repealing the greenhouse gas emissions standards as part of the deal. Why don't we do that first? Then we can talk about alternative policies—if any.

Also, note the idea that a deal could be done so that a carbon tax would be offset by reductions in other taxes and would therefore be revenue neutral. There are multiple problems with the idea of revenue neutrality. First, it never works. A new tax will quickly be raised. Second, the poorer people are, the higher the percentage of their income that goes for energy. Poor people already don't pay much or any income tax. So a consumption tax offset by, for example, cuts in the corporate income tax rate, would be highly regressive. Third, the only way a carbon tax would reduce fossil fuel consumption and thus greenhouse gas emissions is if it's set quite high. And the only way a carbon tax will raise much revenue is if it's set quite high. Thus they must be advocating European levels of taxation. Say $5 dollars a gallon of gasoline. Roughly $500 per ton of coal (which is currently selling for $65 a ton at most).