Mar 142013

Part of the problem with fossil fuels is that nobody pays for the damage they do to the environment.  Instead, their pollution remains and does damage, and the expense of the damage is borne by the people damaged, such as medical costs by individuals and cleanup costs by taxpayers.  Cap and Trade is the most often proposed solution to that problem, but I think there is a better alternative.

14CarbonTaxLooking for a way to improve the operation of the economy, lower our dependence on foreign oil, reduce pollution, slow global warming, cut government spending, and decrease the long-term budget deficit? Then you should support a carbon tax, which could help the nation address all these issues simultaneously. A new paper I’ve written with Samuel Brown and Fernando Saltiel, Carbon Taxes as Part of the Fiscal Solution, argues the tax would even be a good idea if we didn’t have a budget problem.

Although a carbon tax would be new for the U.S. government, it already has been implemented in several European countries (though not always in the manner advocated by economists), Australia, and three Canadian provinces. California recently initiated a cap-and-trade system, which auctions carbon permits to companies and functions much like a tax.

A carbon tax makes good economic sense: Unlike most taxes, it can correct a market failure and make the economy more efficient. Although there are substantial benefits from energy consumption, there are also big societal costs that people don’t pay for when they produce and consume energy – including air and water pollution, road congestion, and climate change. Since buyers of fossil fuels don’t directly bear many of these costs, they ignore them when they decide how much and what kind of energy to buy. And that results in too much consumption and production of these fuels. Economists have long recommended a tax on fossil fuel energy sources as an efficient way to address this problem…

Inserted from <Christian Science Monitor>

At one time many Democrats supported a carbon tax, but they moved to cap and trade for the sake of bipartisanship.  Cap and trade, that Republicans so hate as Satanic Kenyan socialism today, was then the Republican alternative to a carbon tax.

Here’s how they are handling it in Australia.

Love that accent!  And I particularly like the way they are using the revenue.

Now, there is as much chance of getting a carbon tax through Congress now as there is that ice hockey will become hell’s national sport, but to realize it in the future, now is the time to start advocating it.


  9 Responses to “A Better Alternative to Cap and Trade”

  1. I agree that a carbon tax is the way to go. Those who use the most, i.e. the rich, would pay more.

    Maybe in 2 years when we take over the House.

  2. A carbon tax makes good economic sense: Unlike most taxes, it can correct a market failure and make the economy more efficient.

    This makes perfect sense for our planet and our children… :smile:

  3. A carbon tax needs to be high enough to make it worthwhile for carbon poluters to lower the carbon emissions rather than just pay the tax.  Maybe something like a cap, a high fine for going over the cap, and a tax on actually emissions. 

  4. BC has had a carbon tax since 2008 but some of the benefits have been ignored by the provincial Liberal party (not the same as the federal Liberal Party and more like the old Republican party in the US).  Attached is a recent article from the Province Newspaper.

    BC's carbon tax is revenue neutral which distinguishes it from the Australian version that appears to be only partially neutral.  But BC's is under review.  The provincial Conservative party (aka Tea Party) wants to do away with the carbon tax altogether.  Since we are heading into a provincial election in May 2013, the gloves are coming off on this topic.  Here's some info from the BC Ministry of Finance that explains it.

    The BC carbon tax is set at $30 per tonne.