Comments on: Media Maturity Smoothing Carbon Tax Path

By: David Collins

David Collins — Sun, 17 Aug 2008 02:34:00 +0000

My apologies: I neglected to state that I refer to the THIRD cartoon in the series. Sorry about that!

By: David Collins

David Collins — Sun, 17 Aug 2008 02:32:15 +0000

It could well be that SOME media are showing maturity and responsibility. Still, the political cartoon http://www.chicagotribune.com/news/opinion/chi-edcart-multimediagallery,0,5944816.gallery shows that the visceral reactions to energy matters are problematic, to put it mildly.

By: Taxes

Taxes — Thu, 14 Aug 2008 19:05:36 +0000

Thank you for clarifying the tax issues that are plaguing the nation right now. There are so many statements floating around that it is difficult to separate the truth from the lies. Your efforts to clarify are much appreciated.

By: James Handley

James Handley — Tue, 05 Aug 2008 19:01:53 +0000

Paul,
      There are several ways to make a carbon tax revenue-neutral.   (Conservative economists support revenue-neutral carbon taxes, too. Look up the papers and speeches of Ken Green at AEI, or Greg Mankiw at Harvard. Nearer the center, see Yale’s William Nordhaus and Gilbert Metclaf and on the liberal side, see Rob’t. Shapiro.)   CTC advocates either a "dividend" or a "tax shift" (or a combination) to make the tax revenue-neutral.
      I share your well-founded fears about handing Congress $ trillions to dole out to the powerful. (See FoE’s analysis of revenue "giveaways" the Lieberman cap-and-trade bill.)   There are ways to assure that a carbon tax is truly revenue-neutral. Dion’s proposal (in Canada) is for the Auditor General to certify that all carbon tax revenue has been distrubuted; none used as general revenue.
      You might prefer a "Carbon Tax and Dividend" over a "Carbon Tax Shift."   Under either, the carbon tax is imposed upstream on coal, oil and gas entering the economy.  Everyone’s fossil fuel prices (and prices of goods that use them) would gradually rise, creating incentives for conservation and renewables. Under a "dividend," revenue would be divided equally and distributed to each household, while under a "tax shift" the funds would be used to reduce or eliminate other taxes.   But neither is a net tax increase, which is why conservative economists are supportive.
      A dividend would more than offset fuel price increases (and the resulting price increases in other goods) for those whose consumption is below average. And the divided avoids the problems you mention of getting your money back and includes people who don’t file income taxes or pay payroll taxes.
      A tax shift might also be progressive, depending on what taxes are reduced with the carbon tax revenue. Al Gore suggests using the funds to reduce payroll taxes.   But as you note, not everyone pays payroll taxes.   Personally, I prefer the dividend approach because it’s so transparent and reaches everyone.

By: Paul Ronnoco

Paul Ronnoco — Tue, 05 Aug 2008 13:26:52 +0000

No tax has even been revenue neutral and I seriously doubt that this one will either. Combined with rising gas prices, a carbon tax will considerably add to the price of everything including food and anything else that is transported to market.
This is to be balanced by income tax reductions????? Be serious. Seniors on fixed\limited incomes won’t benefit from the income tax reduction but will suffer from the consequences of higher prices for everything brought about by the carbon tax. Everyone who has filled out an income tax form also knows that by the time you do all the calculations to get any "income tax credit" that it amounts to small change.
As a Liberal, I won’t be voting for a carbon tax in the next election.

By: James Handley

James Handley — Sun, 03 Aug 2008 16:05:16 +0000

U.S. Carbon Tax would push trading partners China and India to follow

We can lead the world, not just by example but by incentive! To avoid disfavoring domestic products, a U.S. carbon tax should "level the playing field" by taxing "embedded carbon" — the carbon emitted in producing imported goods. This "harmonization" is sanctioned by international trade agreements. Facing carbon taxes on exports to the U.S., our trading partners will either enact their own carbon taxes or lose the potential carbon tax revenue on exports.
Straightforward harmonization is a tremendous advantage of a carbon tax over "cap-and-trade" systems. China and India firmly reject emissions caps, citing their need to increase emissions to achieve decent living standards. This contentious issue of setting appropriate caps depending on level of development largely vanishes under a system of carbon taxes. Once the biggest trading partner in the world (the U.S.) starts taxing carbon, everyone will have incentives to "get with the program." A harmonized carbon tax would save years of struggle to set appropriate caps and determining how they would inter-relate and instead would create incentives to reduce emissions where and when the cost is least.