So, is President Trump going to institute a carbon tax? Several former Republican officials are lobbying him to do just that, Bloomberg reports:
A group of prominent Republicans and business leaders backing a tax on carbon dioxide were taking their case Wednesday to top White House aides, including chief economic adviser Gary Cohn.
The group, including former Treasury Secretaries Hank Paulson and James Baker, is pressing President Donald Trump to tax carbon dioxide in exchange for abolishing a slew of environmental regulations…”We know we have an uphill slog to get Republicans interested in this,” Baker said before heading to the White House. But “a conservative, free-market approach is a very Republican way of approaching the problem.”
A carbon tax brings with it a lot of practical problems. But it is not something conservatives should necessarily oppose reflexively just because environmentalists might like it.
If offset by the abolition of other taxes, and accompanied by a serious round of regulatory reform for the businesses that would otherwise see their burden increase disproportionately, it would at least represent a far more efficient means of reducing carbon emissions than anything else under consideration. (It’s certainly a better idea than cap-and-trade, which is just an invitation to rent-seekers.)
The idea sort of resembles the FairTax or National Retail Sales tax that many conservatives support:
The blueprint involves a $40 tax on every metric ton of carbon dioxide released by burning fossil fuels, with the price climbing over time. To avoid an undue burden on the poor from the higher energy bills that would result, the projected $200 billion to $300 billion in annual revenue would be redistributed to households in the form of quarterly checks from the Social Security Administration. Families of four would see an average annual payout of $2,000 under the plan.
But I say “sort of resembles” because if the entire take is being redistributed to the population on a per-capita basis, as appears to be the case here, then this isn’t really a tax proposal at all. It’s a simple trade-off of new taxes in exchange for getting rid of regulations. And that can be risky, because politicians in the future are sure to see this as a tax they can raise to gain revenue beyond what goes back to the population. That particular incentive doesn’t exist when it comes to creating more costly environmental regulations.
This idea seems more appealing if it’s framed instead as an actual tax idea, intended to replace other taxes. Assuming you’d pay the same amount, wouldn’t it be nice (in theory) to pay your taxes day-by-day through your electrical and gas bills, instead of going through complex and frustrating paperwork every spring?
The biggest obstacle to that is probably that the base isn’t broad enough, and we won’t be using carbon-based energy in perpetuity. Then again, think of it this way: A carbon tax that raises no net revenue and merely replaces regulations, while probably a bad idea in itself, could serve as a test-run for replacing the entire tax code someday. Once the infrastructure exists to send out quarterly “pre-bate” checks to every household, and the bureaucracy has had a chance to test it, study its effects and iron out the kinks, it could be easier to shift the entire tax code to a broad-based FairTax.
Still, that’s all pie-in-the-sky talk. The more immediate problem, mentioned in the Bloomberg piece, is that the House voted for a resolution last year soundly condemning a carbon tax as “detrimental to the United States economy.” It’s hard to vote for that and then turn around and vote for a carbon tax — and 231 Republicans and six Democrats (most of whom are still in office) just voted for that resolution.
The answer to whether conservatives should support this is probably first, not in this form, and second, it’s a moot point anyway.
