Is a carbon tax a conservative idea whose time has come? Carbon tax proponents have been preaching that message for years. It is nonsense.
The issue is once again a hot topic of political discussion because Rep. Carlos Curbelo (R-Fla.) has just introduced a carbon tax bill euphemistically titled the “Market Choice Act.” After all, paying taxes is never a choice unless you’re willing to incur fines or go to jail.
Rep. Curbelo is the co-chairman of the House “Climate Solutions Caucus.” Maybe the bill will secure his reputation as a climate leader, right up there with such stellar conservatives as Al Gore and Bill McKibben. But the bill is bad policy and political poison for the conservative movement if they embrace it.
First, let’s see why it’s bad policy.
The bill would eliminate the existing federal gas tax and replace it with a tax on carbon dioxide emissions from coal, oil, and natural gas—fuels that supply 80 percent of all the energy Americans use. The tax starts at $24 per ton in 2020 and increases annually by 2 percent above inflation through 2030. Despite abolishing the federal gas tax, the bill would increase gasoline prices by up to 11 cents per gallon, according to a Columbia University report promoting the Curbelo plan.
The report also estimates the carbon tax would increase per capita energy expenditures by $275 in 2020 and by $168-$278 in 2030. In other words, a household of four could see its annual expenditures for motor fuel and utilities increase by more than $1,000. Ouch.
In all, the Curbelo proposal imposes between $874 billion and $946 billion in cumulative new tax burdens from 2020 to 2030. That is more than half of the $1.5 trillion tax cut Congress and President Trump enacted last year. The tax cut and Mr. Trump’s deregulatory initiatives have helped boost GDP growth above 4 percent, create more than 1 million new jobs this year, and drive down unemployment to the lowest rate since 2000.
A carbon tax, in contrast, is an economic depressant. It is a direct assault on investment and job creation in the mining and energy-intensive manufacturing industries, leeches hundreds of dollars annually out of household budgets, and makes the U.S. economy in general less competitive by increasing production and transportation costs.
The Tax Foundation, for example, estimates that a $20 per ton carbon tax would reduce the size of the economy by 0.8 percent, potentially cutting the overall benefit of the 2017 tax cut in half.
The Curbelo bill allocates 70 percent of the carbon tax revenues to the Highway Trust Fund, which has been running chronic deficits since 2008. However, by replacing fuel taxes with an economy-wide energy tax, the bill replaces the Fund’s bedrock User Pays principle with a scheme in which non-users increasingly subsidize users—a recipe for fiscal profligacy, pork-barrel politics, and waste.
Supposedly, it’s all worth it because the tax would reduce U.S. carbon dioxide-equivalent greenhouse gas emissions 40 percent below 2005 levels. But EPA climate modeling indicates that a 40 percent reduction in U.S. emissions would avert less than three hundredths of a degree Celsius of global warming by 2050. That miniscule temperature reduction is smaller than the margin of error and would be undetectable with current scientific methods.
More importantly, that vanishingly small temperature reduction would make no practical difference to weather patterns, sea levels, polar bear populations or any other environmental condition people actually care about. Yet to achieve that inconsequential result, Americans would have to incur $800 billion-plus in new taxes.
That is a lot of economic pain for no real environmental gain. You don’t need to be a scientist to see that is a bad policy.
Why then should conservatives in particular give the Curbelo bill the cold shoulder? For starters, history has discredited every rationale carbon taxers have used to woo conservatives to their cause.
Back in 2015 and 2016, they assured us there is no plausible scenario by which “conservative political force” can undo the Obama administration’s command-and-control climate regulations. Thus, supposedly, our only hope of avoiding regulatory excess is to offer the greens something they want in return, namely a carbon tax. The same experts also said conservatives could not cut corporate tax rates unless we agreed to support a carbon tax.
But then Donald J. Trump campaigned and won on a platform to repeal or reform harmful and ineffective EPA regulations. Trump and the GOP-led Congress proceeded to roll back EPA climate regulations and cut corporate taxes.
President Obama’s climate policies were just a collection of implicit carbon taxes. So how can it be smart politics now for conservative leaders to stump for an explicit carbon tax?
Similarly, conservatives in the 111th Congress defeated the Waxman-Markey cap-and-trade bill by exposing it as cap-and-tax—a stealth tax on energy. Democrats lost the House in 2010 chiefly because they voted for the Waxman-Markey bill. By what logic is it now smart politics for conservatives to support an open and avowed energy tax?
Here’s the big picture in a nutshell. The struggle for hearts and minds in this country is to no small degree a contest between a conservative movement that is pro-energy and anti-tax and a progressive movement that is pro-tax and anti-energy. That clear product differentiation is an immense advantage for conservatives. It is an asset motivating millions of people to support conservative candidates.
Forthright rejection of a carbon tax is sound politics because, despite decades of fossil fuel-bashing propaganda, most Americans still understand the common sense of the matter. The power to tax involves the power to destroy. Affordable energy is a blessing not a curse. Unleashing America’s energy producers creates jobs, makes U.S. manufacturing more competitive, benefits consumers by lowering gasoline prices and utility bills, and strengthens America geopolitically at the expense of Russia and OPEC.
Clarifying those fundamentals for the general public will help conservatives inspire and lead the nation in the years ahead.