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In early 2017 we added a coda to our pages of supporters: a compendium of statements by Trump administration officials from the president on down, dismissing climate change and denigrating climate science and scientists, posted in March 2017 by New York Times climate-politics correspondent Coral Davenport. 

A useful, current (May 2020) addendum is Fight Over Virus’s Death Toll Opens Grim New Front in Election Battle. This front-page Times’ story reports that key climate denialist organizations such as the Heritage Foundation and funders such as the Mercer Family Foundation “that hold immense sway inside the Trump White House and are deeply invested in the president’s political future,” are abetting a form of “Covid-19 denialism” by dismissing not just projections but actual counts of Coronavirus fatalities.

Ms. Davenport’s 2017 compilation, Climate Change Denialists in Charge, follows, with photos from her story:

As President Trump prepares to unveil an executive order to dismantle President Barack Obama’s climate change policies, Washington’s policy-making posts are filling with officials who have a record of openly denying the established science of human-caused climate change.

Climate denial starts at the top:

President Trump

Mr. Trump, the ultimate decider, has demonstrated a cavalier approach to the peer-reviewed atmospheric data that makes up the core of climate science. He has called Mr. Obama’s climate change regulations “stupid.” But in other forums, he has denied making some of those statements and shifted his position.

He said of climate change at a 2015 rally in South Carolina: “A lot of it’s a hoax. It’s a hoax.”

But in an interview with The New York Times shortly after the election, he seemed to moderate: “I have an open mind to it.”

 

Vice President Mike Pence

Mr. Pence, the president’s influential No. 2, has appeared to question climate science, although his aim was less to question the existence of climate change as to stand up for the coal-fired power plants that provide his home state, Indiana, with most of its electricity.

What he has said

“It’s just a few years ago, we were talking about global warming, which is — we haven’t seen a lot of warming lately. I remember back in the ’70s when we were talking about the coming ice age. And, look, you know, we have — we’ve had a tough winter. And in the Midwest, we’re — we’re made of hardy stock. We’ve seen these kind of winters before. And we’ll shoulder through them. We’ll leave the scientific debates for the future.” — MSNBC interview, 2014.

In an interview with CNN in September, Mr. Pence, like his boss, modulated that view.

“There’s no question that the activities that take place in this country and in countries around the world have some impact on the environment and some impact on climate. But Donald Trump and I say let’s follow the science, but for heaven’s sakes let’s not go rushing into the kind of restrictions on our economy that are putting Americans out of work and, frankly, are driving jobs out of this country.”

[CTC addendum: not only does coal provide most of the electricity generated in V-P Pence’s Indiana, as The Times’ photo caption states; in 2015 and 2016 Indiana was second among the 50 states in generating electricity from coal , exceeded only by Texas.]

Stephen K. Bannon

Mr. Trump’s influential senior strategist is the former chief executive at Breitbart News, which regularly publishes articles with headlines like “Global Temperatures Plunge. Icy Silence From Climate Alarmists” and “Climate Change: The Greatest-Ever Conspiracy Against the Taxpayer.” Mr. Bannon is said to be pushing Mr. Trump to withdraw the United States from the 2015 Paris agreement, which committed nearly every country to take action on carbon dioxide pollution.

What he has said

The national debt is “not a manufactured crisis like global warming or the health care crisis. This is a — this is an existential crisis.” — Fox News, 2010.

Scott Pruitt

The administrator of the Environmental Protection Agency will lead the complex legal efforts to dismantle the Obama-era E.P.A. climate change regulations.

What he has said:

“I think that measuring with precision human activity on the climate is something very challenging to do, and there’s tremendous disagreement about the degree of impact, so, no, I would not agree that it’s a primary contributor to the global warming that we see.” — Mr. Pruitt on carbon dioxide and the environment on CNBC’s “Squawk Box,” March 9.

David Kreutzer

Mr. Kreutzer, a top E.P.A. aide to Mr. Pruitt, spent years at the conservative Heritage Foundation, where he was a vociferous critic of climate science. Mr. Kreutzer is pressing a hard-line stance against climate policies, such as legally challenging court-ordered regulation of carbon dioxide pollution.

What he has said

On a panel in January about carbon dioxide emissions, fellow panelists suggested that increased carbon dioxide emissions could be beneficial to the planet. The crowd’s laughter prompted Mr. Kreutzer to snap, “You’re laughing because you’re ignorant.”

“A common claim among proponents of action on climate change is that the overwhelming majority of climatologists agree on global warming science. One commonly cited statistic is that 97 percent of climatologists agree on global warming. … The 97 percent statistic is nothing more than a false talking point; no overwhelming consensus exists among climatologists on the magnitude of future warming or on the urgency to reduce greenhouse gas emissions.” — “The State of Climate Science: No Justification for Extreme Policies,” 2016 Heritage Foundation report, with Mr. Kreutzer as lead author.

James Inhofe

The author of a 2012 book, “The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future,” and a senior member of the Senate committees on the environment and armed services, Senator Inhofe is a crucial voice in the debate over climate change. Mr. Trump and Mr. Pruitt have mined Mr. Inhofe’s former staff members to serve as energy and environment policy advisers.

What he has said

“Obama has built a culture of radical alarmists, and they’ll be back. You and I and the American people have won a great victory, but the war goes on. Stay vigilant.” — Video address this month to the Heartland Institute, a group devoted to discrediting climate change.

“The claim that global warming is caused by man-made emissions is simply untrue and not based on sound science.” — Mr. Inhofe, circa 2003.

Lamar Smith

Mr. Smith, chairman of the House science committee, has subpoenaed scientists and questioned their work on many topics, but particularly on human-caused climate change.

What he has said

“Climate change is caused by a combination of factors, including natural cycles, solar variability and human activity. Scientists still disagree about how much each of these factors contributes to overall climate change. What climate alarmists say is sometimes untrue and often exaggerated. We should rely on good science, not science fiction, when we evaluate climate change.” — Op-ed article in USA Today, 2015.

Rick Perry

Mr. Perry, now the secretary of energy, drew attention during his tenure as the governor of Texas and as a presidential candidate in 2012 and 2016 for mocking climate science. But during his Senate confirmation hearing to head an agency that oversees much of the government-funded research into climate change, Mr. Perry reversed those views.

 What he has said

“It’s all one contrived phony mess that is falling apart under its own weight. Al Gore is a prophet all right, a false prophet of a secular carbon cult, and now even moderate Democrats aren’t buying it.” — “Fed Up! Our Fight to Save America From Washington,” a 2010 book written by Mr. Perry.

But at his confirmation hearing in January, Mr. Perry reversed that view:

“I believe the climate is changing. I believe some of it is naturally occurring, but some of it is also caused by man-made activity. The question is: How do we address it in a thoughtful way that doesn’t compromise economic growth, the affordability of energy or American jobs?”

This page features editorial positions by newspapers, magazines, etc. (rather than merely opinions expressed by columnists or reporters). Half a dozen other pages with different “supporter” categories may be accessed via the “Progress” tab in our menu bar.

The New York Times

Editorials at the Times carry the imprimatur of the editorial board. In years past, the Times repeatedly urged only that nations “put a price” on carbon emissions — a vague formulation that has often connoted support for cap-and-trade. In 2015, the board finally began calling for an explicit carbon tax, and opened 2016 citing British Columbia’s successful carbon tax:

Proof That a Price on Carbon Works (January 19, 2016):

British Columbia started taxing emissions in 2008. One big appeal of its system is that it is essentially revenue-neutral. People pay more for energy (the price of gasoline is up by about 17 cents a gallon) but pay less in personal income and corporate taxes. And low-income and rural residents get special tax credits. The tax has raised about $4.3 billion while other taxes have been cut by about $5 billion. Researchers have found that the tax helped cut emissions but has had no negative impact on the province’s growth rate, which has been about the same or slightly faster than the country as a whole in recent years.

The Paris Climate Pact Will Need Strong Follow-Up  (December 14, 2015):

Much was said about how the agreement sent a strong “signal” to investors, and indeed, Paris was swarming with corporate chieftains and Silicon Valley heavyweights. But the strength of that signal will depend heavily on whether governments are willing to promote such investments while removing the tax subsidies that favor dirtier fossil fuels — perhaps to the point of embracing carbon taxes.

The Case for a Carbon Tax (June 6, 2015):

A carbon tax would raise the price of fossil fuels, with more taxes collected on fuels that generate more emissions, like coal. This tax would reduce demand for high-carbon emission fuels and increase demand for lower-emisson fuels like natural gas. Renewable sources like solar, wind, nuclear and hydroelectric would face lower taxes or no taxes. To be effective, the tax should also be applied to imported goods from countries that do not assess a similar levy on the use of fossil fuels.

Revenue generated by carbon taxes could be used for a variety of purposes. A lot of the money should surely be given to households, especially the poorest, through tax credits or direct payments to offset the higher prices they would have to pay for gasoline, electricity and other goods and services because of the tax. Some of the money could be used to invest in renewable energy and public transportation, or to lower other taxes.

Global Warming and Your Wallet (July 6, 2007): “When the market, on its own, fails to arrive at the proper price for goods and services, it’s the job of government to correct the failure… We are now using the atmosphere as a free dumping ground for carbon emissions. Unless we — industry and consumers — are made to pay a significant price for doing so, we will never get anywhere.”

Warming Up on Capitol Hill (March 25, 2007): “Forcing polluters to, in effect, pay a fee for every ton of carbon dioxide they emit will create powerful incentives for developing and deploying cleaner technologies.”

The Truth About Coal (Feb. 25, 2007): “There is a need to put a price on carbon to force companies to abandon older, dirtier technologies for newer, cleaner ones. Right now, everyone is using the atmosphere like a municipal dump, depositing carbon dioxide free. Start charging for the privilege and people will find smarter ways to do business. A carbon tax is one approach. Another is to impose a steadily decreasing cap on emissions and let individual companies figure out ways to stay below the cap.”

Avoiding Calamity on the Cheap (Nov. 3, 2006): “Since the dawn of the industrial revolution, the atmosphere has served as a free dumping ground for carbon gases. If people and industries are made to pay heavily for the privilege, they will inevitably be driven to develop cleaner fuels, cars and factories.”

The Washington Post

Carbon tax is best option Congress has (May 7, 2013):

Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, announced last month that he wants to spend the rest of his final term in office reforming the tax code , and there are signs that Republicans want an overhaul this year, too…

No honest tax reform paper, for example, would be complete without discussion of a carbon tax, an elegant policy Congress could immediately take off the shelf. It would make polluters pay for their own pollution, which is the best way to encourage greener thinking. It would cut emissions without overspending national wealth on grandiose central planning or command-and-control regulation. And it would raise revenue, which lawmakers could use for debt reduction, lowering other taxes, improving the social safety net or some combination. The carbon tax is one of the best ideas in Washington almost no one in Congress will talk about.

Those still worried about the economic effects need only consider how it could fit into a bigger tax-reform package such as the one Mr. Baucus wants to produce. Surely, Republicans should want to replace economy-sapping taxes on labor or business in return for a much more efficient tax on pollution. Democrats should be pushing for some of the revenue to pump up programs such as the Earned Income Tax Credit to ensure the carbon tax doesn’t sting consumers, particularly those least able to afford it.

Lawmakers should read the Finance Committee staff’s work and then consult a recent analysis by the Brookings Institution’s Adele Morris , who found that even a relatively modest carbon tax could produce nearly a trillion dollars in debt reduction over two decades, significantly drop other tax rates and enhance anti-poverty programs.

The carbon tax (November 10, 2012):

EARLY WEDNESDAY, delivering his victory speech in Chicago, President Obama elevated an issue that had hardly come up during the campaign. “We want our children to live in an America,” he said, “that isn’t threatened by the destructive power of a warming planet.”

Later that day, Senate Majority Leader Harry M. Reid (D-Nev.) told reporters that climate change is an important issue and that he wants to “address it reasonably” — particularly following big storms in the Northeast that have highlighted rising sea levels and other dangers associated with global warming.

House Speaker John R. Boehner (R-Ohio), meanwhile, spoke about cooperating with Democrats on urgently needed budget reform

Now if there were just some policy that would reduce carbon emissions and raise federal ­revenue . . .

A tax on carbon, of course, is that policy, and lawmakers and the president should be discussing it. The idea is to put a simple price on emissions of carbon dioxide and other greenhouse gases — some dollar amount per ton of CO² — that steadily increases at a pre-set rate.

This is the best plan lawmakers can take off the shelf to fight global warming. As an added benefit, it would reduce dependence on imported oil. If businesses and consumers had to pay something for the otherwise invisible costs of their actions — in this case, pollution — they would be more careful. Their combined preferences, not those of Congress or bureaucrats, would determine how to wring carbon out of the economy.
Homeowners might turn down their thermostats or weatherize their windows. Power companies would devise the cheapest ways to reduce the carbon dioxide they emit, without the government ordering them to build this or to refrain from that. At first, they would probably burn more natural gas and less coal, a cheap way to cut lots of emissions quickly. In the long term, the demand for green technologies would expand, and with it private investment.

Sorry Record – Waiting for breakthrough technologies is not the way to reduce greenhouse gases (July 11, 2006)

[The Administration] has resisted taxing carbon use, preferring instead to provide incentives for oil and gas extraction — just the opposite of what’s needed.

Some Positive Energy — Now Start Talking About a Carbon Tax, (June 25, 2007).

As important as many of the measures in [the Senate energy] bill are, they amount to only tinkering at the margins of a serious problem. What the Senate bill doesn’t do — and what the House bill won’t do when it is brought to the floor for consideration next month — is spark a necessary debate on the imposition of a cap-and-trade system or a carbon tax. This must be on the agenda after the Fourth of July recess when the Senate is expected to take up global warming. Sooner or later, Congress will have to realize that slapping a price on carbon emissions and then getting out of the way to let the market decide how best to deal with it is the wisest course of action.

Los Angeles Times

How California can best fight climate change (July 14, 2014):

A carbon tax that pushes up gas prices would give all California drivers reason to be gas-thrifty. They could then decide whether to use their tax credit to offset the increased cost of buying gas or find ways to reduce gas purchases and use the credit for other purchases. Substantially larger tax credits would go to lower-income residents and perhaps to rural residents for whom public transit isn’t available. Some of the money could be set aside for rebates to residents who buy fuel-efficient cars, or to agricultural operations that switch to cleaner farm vehicles or methane-capture technologies.

The L.A. Times ran two stirring editorials in May-June 2007 that powerfully made the case for taxing carbon. Here are excerpts:

Time to Tax Carbon, (May 28, 2007):

There is a growing consensus among economists around the world that a carbon tax is the best way to combat global warming, and there are prominent backers across the political spectrum … Yet the political consensus is going in a very different direction. European leaders are pushing hard for the United States and other countries to join their failed carbon-trading scheme, and there are no fewer than five bills before Congress that would impose a federal cap-and-trade system. On the other side, there is just one lonely bill in the House, from Rep. Pete Stark (D-Fremont), to impose a carbon tax, and it’s not expected to go far.

The obvious reason is that, for voters, taxes are radioactive, while carbon trading sounds like something that just affects utilities and big corporations. The many green politicians stumping for cap-and-trade seldom point out that such a system would result in higher and less predictable power bills. Ironically, even though a carbon tax could cost voters less, cap-and-trade is being sold as the more consumer-friendly approach.

A well-designed, well-monitored carbon-trading scheme could deeply reduce greenhouse gases with less economic damage than pure regulation. But it’s not the best way, and it is so complex that it would probably take many years to iron out all the wrinkles. Voters might well embrace carbon taxes if political leaders were more honest about the comparative costs.

Reinveting Kyoto, (June 11, 2007):

A better treaty [than Kyoto] would scrap the unworkable carbon-trading scheme and instead impose new taxes on carbon-based fuels. As recently explained in the first installment of this series [Time to Tax Carbon, above], carbon taxes avoid many of the pitfalls of carbon trading. They would produce an equal incentive for every nation to clean up without relying on arbitrary dates or caps, or transferring money from one nation to another. They’re also much less subject to corruption because they give governments an incentive to monitor and crack down on polluters (the tax money goes to the government, so the government wins by keeping polluters honest)… Real solutions to global warming, such as carbon taxes, won’t come cheap — they’ll make power bills steeper and gas prices even higher than they are now. But the economic news isn’t all bad. Much of the clean technology of the future will probably be developed in the United States and sold overseas. Think of [a carbon tax] as a novel way of reducing our trade deficit with China while building a cleaner world.“

For the strong critique of cap-and-trade in the Time to Tax Carbon editorial, click here.

Other Newspapers

Albany Times-Union:

THE ISSUE: Evidence of a warming planet is clear and obvious.

THE STAKES: A carbon tax is needed to stave off a looming global crisis.

[Fossil fuel subsidies] are an absurd use of public finances, and must be eliminated as quickly as possible. That long-overdue move must be coupled with a stiff carbon tax that makes fossil fuels artificially and increasingly expensive. Such a tax would immediately make greener energy more competitive, and encourage private enterprise to develop new and better technologies. And it would acknowledge that fossils fuels have a negative societal cost that is increasingly intolerable.

Here’s another idea with merit: an import tax that charges manufacturers for the carbon impact of their products. Such tariffs, which are now being weighed by the European Union and Democrats in Congress, would leverage American buying power to force global changes and reduce concern that fighting climate change domestically puts the country’s economy at a global disadvantage.

Certainly, carbon taxes and tariffs would hit lower-income Americans too hard. That’s why both must be structured with rebates that alleviate the pain.

But as 100-year storms become 10- or 5-year storms, the cost of our stubborn inaction grows increasingly clear. The time for change is now, if not sooner.

Editorial: How soon is now?, Sept 8, 2021.

Detroit Free Press:

A tax on carbon dioxide emissions, phased in gradually but relentlessly, would be the most transparent and efficient step this country could take in the search for energy independence and reductions in many emissions, including carbon dioxide. It would send a hugely important signal to the markets — for cars and for alternative energy sources such as windmills and solar collectors, in particular — that innovation and conservation are essential. Consumers are going to pay for any measures taken to reduce greenhouse gases and shift away from dependence on foreign petroleum. But most politicians choose instead to hide the costs by placing expensive demands on automakers and by dispensing subsidies for alternative fuels, such as ethanol, that become a hidden tax burden. A cap-and-trade system for emissions also would have disguised costs. Keep Carbon Tax in the Mix of Solutions, July 12, 2007.

Chicago Tribune:

[T]he ultimate goal should not be to reduce the price consumers pay at the pump. It should be to reduce the amount going to oil producers. Global warming is more than ample grounds for levying taxes on carbon-based fuels, including gasoline, to reduce emissions. But those taxes would fall partly on foreign oil producers. By cutting consumption, they promise to put downward pressure on world crude oil prices—weakening OPEC and stemming the flow of dollars to anti-American regimes. American consumers have a choice: They can pay high prices to oil producers or to themselves. The tax proceeds can be used to finance programs of value here at home or to pay for cuts in other taxes—even as they curb the release of carbon dioxide. Pump Pain, May 20, 2008.

Christian Science Monitor:

Consumption taxes, after all, are often designed to wean people off bad behavior, such as smoking. A 90 percent drop in these emissions is probably what’s needed to limit any rise in atmospheric warming to 2 degrees Celsius, a goal that many scientists recommend. Most presidential candidates do endorse pinching pocketbooks, but only indirectly, such as by calling for higher fuel efficiency in vehicles and a cap on greenhouse-gas pollution from company smokestacks. Such demands on industry have the advantage of creating more certainty in reducing emissions, but they are complex to enforce. Gore would do both: tax carbon use and cap emissions. Putting a crimp on global warming can’t be done solely by promoting new energy technologies and voluntary conservation. Consumers of oil and coal need a direct tax shock. Christian Science Monitor, July 5, 2007.

The Monitor was even more direct in a pair of editorials on Oct. 25 and 26. In the first, Be Wary of Complex Carbon Caps, the Monitor noted the loopholes, fraud and other problems that have hamstrung carbon cap-and-trade programs. In the second, A Tax on Carbon to Cool the Planet, the Monitor summarized the first editorial:

Indeed, caps may put the US on a knowable track to, say, an 80 percent reduction in carbon emissions by 2050. But as the previous Monitor’s View pointed out, the flaws in cap-and-trade plans as experienced in other nations – their complexity and vulnerability to fraud and special-interest lobbyists – would reduce the intended effect. They also take a long time to set up and get working right. And, in the end, they also raise energy prices for consumers, just not as directly as a tax.

The Monitor then concluded:

With Europe’s cap-and-trade system faltering, the US should be a leader in using a carbon tax, even if big polluters such as China don’t follow. As a last resort, the US could tax goods from countries that fail to cut their carbon emissions.

A carbon tax is not the whole solution. Regulations will still be needed, such as stiffer fuel-economy standards for cars and trucks. And the US should fund research into alternative fuels, too. All it takes is the political will to act.

Eugene (OR) Register-Guard:

The crisis presented by global warming demands a response that is simple, comprehensive and effective. A tax on carbon consumption is the only response in sight that both discourages the production of emissions that cause global warming, and finances the rapid transition to a post-carbon economy… “The best way to tax carbon fuels is at the point of production: at the wellhead, mine or biofuel plant. The added tax should be large – starting at the equivalent of $1 per gallon of gasoline, and increasing to the equivalent of $6 per gallon of gasoline over 10 years… The phase-in of high taxes on carbon fuels over 10 years will provide huge incentives for market-financed, market-driven, market-governed development of unsubsidized, safe, sustainable alternate energy sources, far more efficient uses of energy, and other alternate products and methods. (The Cold Truth, July 22, 2007).

A “robust” carbon tax — one high enough to significantly change fuel incentives, drive innovation and transform our energy system and culture — is going to generate large amounts of revenue.

Fossil-fuel burning in the U.S. now (pre-pandemic, 2019) emits around 5 billion metric tons of carbon dioxide a year. A carbon tax set at the threshold of robustness — $50 per metric ton — would generate roughly $250 billion a year in new tax proceeds. That’s a significant figure by any measure. It equates to 6-7 percent of total U.S. tax proceeds (currently $3.86 trillion). Spread among the country’s 128.5 million households (as of 2017), it’s $1,950 a year.

Not surprisingly, “what to do with the carbon tax revenue” is the most contentious issue surrounding carbon tax proposals, especially for possible carbon taxes at the federal level where the tax rate could be higher and political divisions are starker.

Revenue-Neutral Carbon-Taxing

Revenue-neutral means that government retains little if any of the tax revenues raised by taxing carbon emissions. Instead, the revenues are returned to the public; with, perhaps, small amounts utilized to assist communities dependent on fossil-fuel extraction and processing to adapt and convert to low- or non-carbon economies.

There are two overlapping but nonetheless disparate reasons for structuring a carbon tax to be revenue-neutral.

One is to appeal to (or appease) voters and elected officials who claim to abhor government and thus don’t want to swell its coffers.

The other is to counter or at least minimize the natural regressivity of carbon taxes by returning revenue in a way that protects the less affluent, while preserving the tax’s price-incentive to reduce emissions. (Keep in mind that wealthier households use more energy, since they generally drive and fly more, have bigger (and sometimes multiple) houses, and buy more stuff that requires energy to manufacture and use.)

There are two primary approaches to returning or recycling the tax revenues.

One approach, discussed below in detail, returns revenues directly through regular (e.g., monthly) “dividends” to all U.S. households or residents. Every resident or household receives an equal, identical slice of the total carbon revenue “pie.” In this approach, which adherents at Citizens Climate Lobby call fee-and-dividend, each individual’s carbon tax is proportional to his or her fossil fuel use, creating an incentive to reduce; but everyone’s dividend is equal and independent of his or her usage, preserving the conservation incentive. Alaska’s dividend program has provided residents with annual allotments from the state’s North Slope oil royalties for three-and-a-half decades.

In the other revenue-return method, each dollar of carbon tax revenue triggers a dollar’s worth of reduction in existing taxes such as the federal payroll tax or corporate income tax — or, on the state level, sales taxes. As carbon-tax revenues are phased in (with the tax rates rising steadily but not too steeply, to allow a smooth transition), existing taxes are phased out. While this “tax-shift” is less direct than the dividend method, it too ensures that the carbon tax is revenue-neutral. It offers other important benefits, as well; for example, reducing payroll taxes could stimulate employment.

To repeat: each individual’s receipt of dividends or tax-shifts is independent of the carbon taxes he or she pays. That is, no person’s benefits are tied to his or her energy consumption and carbon tax “bill.” This separation of benefits from payments preserves the carbon tax’s incentive to reduce use of fossil fuels and emit less CO₂ into the atmosphere. (Of course, it would be extraordinarily cumbersome to calculate an individual’s full carbon tax bill since to some extent the carbon tax would be passed through as part of the costs of various goods and services.)

Revenue-neutrality not only protects the poor, it’s also politically savvy since it offers a way to blunt the “No New Taxes” demand that has held sway in American politics for decades. Returning the carbon tax revenues to the public would also make it easier to raise the tax level over time, a point made nicely by McGill University professor Christopher Ragan in a 2008 Montreal Gazette op-ed, and subsequently borne out by the experience in British Columbia where a revenue-neutral carbon tax was ramped up in four annual increments; that tax remains politically popular and is driving down emissions.

In any event, either of the two “revenue return” approaches — carbon dividends and tax-shifting — can make carbon taxes income-progressive. Because income and energy consumption are strongly correlated, most poor households will get more back in their carbon dividends or via tax-shifting than they will pay in the carbon tax. The overall effect of a carbon tax could thus be equitable and even “progressive” (benefiting lower-earning households).

Revenue-Positive Carbon-Taxing (Investing in Alternatives)

It may seem axiomatic that carbon-tax revenues should fund renewable energy or efficiency upgrades. And that approach always polls well, making it politically attractive.

Nevertheless, climate and energy realities indicate that only a robustly-rising carbon tax can deliver the deep and broad CO2 emission reductions needed to avert climate disaster. Building public support and maintaining the fairness needed for such a substantial carbon tax can most easily be done if all or nearly all of the carbon-tax revenue is returned to taxpayers. See “Making a carbon tax income-progressive” and our blog post: “Which Carbon Tax: Robust or Miniature? (July 7, 2013)”

Dividends

(a/k/a Carbon Dividends or “Green Checks”)

One revenue treatment that is both income-progressive and appealingly straightforward is to return the revenues equally to all U.S. residents. This  so-called “dividend” would be a national version of the Alaska Permanent Fund, which since the 1970s has annually sent all state residents identical checks drawn from earnings on investments made with the state’s North Slope oil royalties. (For a federal carbon tax, the “dividend” checks should be provided quarterly or monthly to keep households ahead of the budget treadmill.)

The dividend approach was so attractive and elegant that the nation’s most energetic and active advocacy organization for carbon taxes has organized around it. That’s the Citizens’ Climate Lobby, which calls its approach carbon fee-and-dividend.

Nevertheless, it seems fair to say (and important to acknowledge) that by 2018, the second year of the Trump administration, fee-and-dividend has run out of political room. Not a single “sitting” (i.e., still in office) Republican member of Congress has publicly endorsed fee-and-dividend, even as a concept, let alone an actual bill. Yet the premise of fee-and-dividend has always been bipartisanship, since Democrats, with their preference for activist government, would accept a revenue-neutral carbon tax such as fee-and-dividend only if it delivered Republican votes.

For a decade, we wrote glowingly about fee and dividend — most recently in 2017 articles in The Nation and the Washington Spectator. We also praised the Climate Leadership Council’s “carbon dividend” proposal and advocacy in those two pieces and in numerous blogs (here, here, and here, inter alia). But as we wrote in June 2018, we believe that the time for carbon dividend proposals has probably passed. We wrote:

The [political] center to which Baker-Shultz (CLC) and fee-and-dividend (CCL) were designed to appeal barely exists. It’s not just that no sitting Republican has endorsed Baker-Shultz or indeed fee-and-dividend in any form. It’s also that the Democratic majority that will be needed to pass a carbon tax bill appears unlikely to rally around a revenue-neutral carbon tax, whether it’s organized as fee-and-dividend or some form of tax swap.

Economic Progressivity of Fee-and-Dividend

In 2016 CCL released a detailed paper examining how a carbon fee-and-dividend would impact U.S. households. The study took into account geographic variations in electricity sources and gasoline use and drew on a database of carbon intensity of expenditures for 5.8 million households to analyze the net effect of returning revenue to households on a modified per capita basis. Here are the major results:

• 53% of households (and 58% of individuals) would receive more in dividend payments than they would spend due to higher fossil fuel prices.
• Another 19% of households would incur only a slight loss, defined as a net loss no larger than one-fifth of one percent of pre-tax income.
• Nearly 90% of households below the poverty line would benefit an average of $311, an increase of roughly 2.8% of pre-tax income.
• In contrast, the net loss for the top quintile of households would average $-322 or only -0.18% of pre-tax income.

Notably, these findings support a dividend plan’s ability to transform a carbon tax into a progressive policy that neutralizes the burden that lower-income households would otherwise face, directly and indirectly, due to higher fuel prices. CTC advocates a progressive distributional outcome for both pragmatic and ethical reasons: pragmatically, because a carbon tax will require broad, sustained, public and political support; and ethically, because it’s not tenable to solve the climate crisis on the backs of those who can least afford it.

A Caveat — CBO’s “haircut”

The non-partisan Congressional Budget Office routinely “scores” members’ bills for their prospective impact on tax revenues. To streamline its analyses, CBO long ago settled the so-called “CBO haircut” by which it assumes that one-quarter of indirectly raised revenues would need to be allocated from the tax proceeds in question in order to make up for reduced tax revenues collected from conventional sources such as personal or corporate income taxes. But modeling of carbon tax proposals consistently finds that when revenue is strategically returned by reducing other taxes that tend to slow down economic activity, the net negative impacts are much lower than CBO’s 25% assumption and in some cases may be eliminated altogether. While returning revenue as “dividends” (which economists call “lump-sum rebates”) offers less potential to reduce economic drag than tax shifts, CBO’s assumption still seems like an over-estimate.

In any event, rigid application of the 25% CBO haircut could, on paper at least — and, likely, in Congressional deliberations — limit the carbon tax revenue perceived to be available for “dividends” to 75%. Yet even with this reduced fraction of revenue, returning carbon tax revenue via a direct dividend represents a simple and income-progressive means to make carbon taxes distributionally fair; though with the haircut, the share of households reaping a net benefit via an equal 75% dividend would be lower than the 58% of individuals mentioned above.

Related CTC blog posts

• The Carbon Tax Revenue Menu (6/10/2011)
• Should Carbon Pricing Advocates Support the Cap-and-Dividend Bill? (12/2/2010)
• Scientist James Hansen Proposes “People’s Climate Stewardship Act”: A Simple Carbon Fee with Revenue Returned to Americans (4/25/2010)
• Progressive Democrats Say: “Cut Out Wall Street — Price Carbon Directly and Recycle Revenue to Households.” (10/20/2009)
• Back to Plan A: The Revenue-Neutral Carbon Tax (7/6/2009)

Related news reports and opinion pieces

• Alaska’s Permanent Dividend Fund — A policy ripe for export (Bangor Daily News, 6/20/2011)
• James Hansen Rails Against Cap-and-Trade in Open Letter, Advocates Fee-and-Dividend to Reduce Carbon Emissions (The Guardian, 1/12/2010)
• Cap and Fade (James Hansen, NYT op-ed, 12/6/2009)
• How CBO budget scoring devalues efficiency (Dave Roberts, Grist 10/15/2009)

Cogent opinion pieces by dividend proponent James K. Boyce (U-Mass, Amherst)

• Does Biden’s insurance policy for the climate go far enough? (The Hill, 2/26/2021)
• Carbon Dividends: The Bipartisan Key to Climate Policy? (Institute for New Economic Thinking, 2/17/2017)
• The Carbon Dividend (New York Times, July 29, 2014)

Tax-Shifting

The distribution of carbon tax burdens creates an opportunity for “progressive tax-shifting,” in which a portion of carbon tax revenue is dedicated to reducing regressive taxes such as the payroll tax (at the federal level) or sales taxes (at the state level). An early proponent of such a carbon tax shift was Al Gore, with his exhortation to “Tax what we burn, not what we earn.” Shifting taxes away from payroll and/or sales taxes and onto carbon pollution could raise, not lower, the after-tax incomes of a majority of below-median-income households, giving this approach a net progressive effect.

In addition to this potential progressive effect of tax shifting, a wide range of economists, [including Lawrence Goulder, Roberton Williams & Ian Parry, Gilbert Metcalf & David Weisbach, Alan Viard, Robert Shapiro, Donald Marron & Eric Toder] have concluded that use of revenue to reduce other taxes would improve the overall efficiency of the economy, for example, by removing burdens on work.

In October 2007, the Brookings Institution published a A Proposal for a U.S. Carbon Tax Swap — An Equitable Tax Reform to Address Global Climate Change by Tufts University economics professor Gilbert E. Metcalf, describing a national carbon tax paired with an income tax credit for payroll taxes paid. Metcalf assessed the impact of a tax of $15 per metric ton of carbon dioxide and five major greenhouse gases. Revenues would be used to credit payroll tax paid on the first $3,660 of earnings per worker. Metcalf showed that such a tax swap would be both revenue-neutral and distributionally-neutral. (Harvard professor and former Bush Administration economist Gregory Mankiw mentioned the Metcalf paper in a Sept. 2007 New York Times op-ed, discussed on our blog.) Rep. John Larson (D-CT) adopted Metcalf’s framework for his “America’s Energy Security Trust Fund Act,” discussed on our Bills page.

More recent analysis has confirmed the importance of carbon tax revenue wisely; using it to reduce other “distortionary” taxes can offer large enough efficiency benefits to reduce or even possibly eliminate the economic drag that a carbon tax would otherwise create. In Deficit Reduction and Carbon Taxes: Budgetary, Economic, and Distributional Impacts (2013) researchers from Resources for the Future found that using carbon tax revenue to reduce corporate income tax rates offers large enough efficiency benefits to more than overcome the efficiency loss of a carbon tax. The next best option is using revenue to cut wage taxes, while using revenue to cutting other consumption taxes is somewhat less efficient. Finally, refunding carbon tax revenue in a “lump sum rebate” (dividend) offers the least economic efficiency benefit.

Reducing the top marginal corporate income tax rate has been articulated as a goal by leaders of both major political parties. In an effort to attract Republican interest, Rep. John Delaney (D-MD) has introduced a carbon tax measure that would devote half its revenue to corporate income tax reduction.

Nevertheless, the growing economics literature on carbon taxes suggests a strong a tradeoff between the efficiency benefits of using carbon tax revenue to cut taxes on capital (as the Delaney proposal would do) and the distributional benefits of cutting taxes on labor (as Rep. Larson’s proposal would).

Related CTC blog posts and articles

• British Columbia’s Carbon Tax Architects Speak (2015).
• The Carbon Tax Revenue Menu, outlining the benefits of various revenue options (2011).
• Carbon Tax Offers Super Powers to Super-Committee, discussing potential for a carbon tax to reduce the deficit (2011).
• Midterm Advice for Congress: Tax Carbon Instead of Jobs (Robert Shapiro, Huffington Post, 2010).
• Capitol Hill Briefing on Carbon Taxes Draws Overflow Crowd, Rep. John Larson (D-CT) led off CTC’s event, articulating the benefits of a taxing carbon pollution while cutting wage taxes (12/9/08).

Related journal articles and papers

• Taxing Carbon and Recycling the Revenue: Who Wins and Loses? (Donald Marron, Eric Toder, and Lydia Austin, Urban-Brookings Tax Policy Center, Nov. 2015).
• Tax Policy Issues in Designing a Carbon Tax (Donald B. Marron and Eric J. Toder, Urban-Brookings Tax Policy Center, 2014).
• Getting to an Efficient Carbon Tax: How the Revenue is Used Matters (Jared Carbone, Richard D. Morgenstern, Roberton C. Williams III, and Dallas Burtraw, Resources for the Future, 2014).
• A Carbon Tax in Broader U.S. Fiscal Reform: Design and Distributional Issues, Adele Morris (Brookings) and Aparna Mathur (American Enterprise Institute), C2ES, 2014).
• Carbon Tax Revenue and the Budget Deficit: A Win-Win-Win Solution? (MIT, 2012).
• The Potential Role of a Carbon Tax in U.S. Fiscal Reform (Brookings, 2012).
• Fiscal Policy to Mitigate Climate Change (IMF, 2012).
• How Climate Policy Could Address Fiscal Shortfalls (Adele Morris & Ted Gayer, Brookings, 2010).
• Addressing Climate Change Without Impairing the US Economy (Robert Shapiro, U.S. Climate Task Force, 2009).
• A Proposal for a U.S. Carbon Tax Swap (Gilbert Metcalf, Brookings, 2007).