On Sunday, economist Gregory Mankiw wrote a piece in the New York Times making the case for a "carbon tax." Among other things, Mankiw discusses how a carbon tax could be adopted without imposing regressive tax burdens.
[The] natural aversion to carbon taxes can be overcome if the revenue from the tax is used to reduce other taxes. By itself, a carbon tax would raise the tax burden on anyone who drives a car or uses electricity produced with fossil fuels, which means just about everybody. Some might fear this would be particularly hard on the poor and middle class.Mankiw also explains why a carbon tax is preferable to various energy conservation regulations, such as automobile fuel economy standards.But Gilbert Metcalf, a professor of economics at Tufts, has shown how revenue from a carbon tax could be used to reduce payroll taxes in a way that would leave the distribution of total tax burden approximately unchanged. He proposes a tax of $15 per metric ton of carbon dioxide, together with a rebate of the federal payroll tax on the first $3,660 of earnings for each worker.
Enhancing fuel efficiency by itself is not the best way to reduce energy consumption. Fuel use depends not only on the efficiency of the car fleet but also on the daily decisions that people make — how far from work they choose to live and how often they carpool or use public transportation.Mankiw also explains why a carbon tax would be preferable to an equivalent cap-and-trade regime. In addition to the points Mankiw raises, I have argued that a cap-and-trade scheme is likely to result in greater corporate rent-seeking.A carbon tax would provide incentives for people to use less fuel in a multitude of ways. By contrast, merely having more efficient cars encourages more driving. Increased driving not only produces more carbon, but also exacerbates other problems, like accidents and road congestion.
The fact that CO2 is invisible makes it the perfect boogeyman for scaring the general public into opening their wallets to the tax suckers. As H.L. Mencken warned:
''The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.''
The PETM is a stunning example of carbon dioxide-induced global warming and stands in contrast to critics who argue that the Earth’s temperature is insensitive to increases in carbon dioxide,” said Pagani. “Not only did the Earth warm by at least 9°F (5°C), but it did so during a time when Earth’s average temperature was already 9°F warmer than today.
Rather, we should be asking why a goodly percentage of the population has lost their collective mind by not laughing these people off their stage with their premature "solutions" for a problem that they've not sufficiently proven to date and are unlikely to ever prove?
If and when they prove it, I'll get on board. Until then I'll shake my head in wonderment -- I'd like to say I'd chuckle under my breath at them, but the damage to the world economy they're trying to invoke (and are already meeting with success via ethanol promotion) is too damn serious to laugh about.
The reality is the exact opposite. No other taxes will be reduced and business and individuals will be saddled with nothing but new forms of taxation.
The entire global warming movement is nothing but a complete fraud. It is a fraud being perpetrated by those that want increased government control and new avenues of taxation.
by "I would let them have the choice" you mean "I would make it vastly more expensive for them to do what they wanted, rather that what I wanted them to do, regardless of the fact that the affluent noticed little change in their own lifestyles?"
I wonder if that is how you described the distributive effects of the Bush tax cuts . . .
It seems like the politically likely result would be for the winning/dominant side to get the half of the scheme that they like and scrap the other half.
This proposal shifts the tax burden from a social good (productivity) to a social evil (energy consumption). Assuming the tax is actually revenue-neutral and not just another excuse to tax something, I'm all for it.
Who cares if they want to dress it up in environmentalist drivel? If the policy is sound, go along with it. There's no reason for knee-jerk opposition here.
I'll make you a deal. I'll accept this argument if you drink 20L of water (that's H2O, of course) in one half hour. water is as natural as oxygen. it is extremely beneficial to human life. the more the merrier, right?
So, when grandma (who doen't live in a big city with busses) needs to go to the doctor, or the pharmacy or for groceries, let's pile the taxes on her? I say let's tax Gore's private jet rides and uber-consumption of electricity first.
The entire global warming movement is nothing but a complete fraud. It is a fraud being perpetrated by those that want increased government control and new avenues of taxation.
Amen!
Lets bring choice back into the market. Plug in hybrids allow people to choose coal, oil/natural gas, nuclear, hydro, wind, wave, etc. They get to make the decision, they get to make the decision to buy energy locally or to import it from the middle east. Furthermore if one commodity price substantially increases we can easily switch which energy we use without changing our entire infrastructure.
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Another thing it seems most of the commentators don't know who Gregory Mankiw is? If don't read up about him. He was the main adviser for the Bush economonic decisions aka the tax cuts from 2003 to 2005, he is an extremely popular blogger. Finally Mankiw is the main Romney economic adviser, and is the author of two of the most used economic books for college students.
I don't know if Smokey will take you up on that challenge or not Brian K, I hope not, so that he doesn't end up dead like that lady that died of water intoxication for a radio contest some months back.
However, your motive in making the challenge is more transparent than Saran Wrap. Your next move, after his likely refusal, is to decry our forcing of the Earth to drink our CO2 without "her" having any choice in the matter, thus be murdered by us.
Fine, believe that if you want, but until the "global warmists" prove their theories scientifically, it's a bunch of bunk.
Sort of like how “temporary” tax increases never seem to expire on schedule (or at all) as promised. How long did we have the tax that was supposed to be around just long enough to pay for the Spanish-American War?
Regardless of whether anyone thinks that a carbon tax would be better than an income tax or the payroll tax, the only guarantee we have with implementing a carbon tax is that it will be in addition to the taxes that already exist (assuming they aren’t also raised in the process).
No thanks.
Ah, no. "She" will survive quite well, just as "she" has in the past. It is we humans who may be SOL if even the least dire predictions come true. Admittedly, that's a big "if," but we're the ones who'll pay the price.
It was meant to be transparent and a joke.
And no. after he (likely*) refuses, i was going to suggest that he spend a month breathing in nothing but pure oxygen. it is as natural as O2 and without it we'd all be dead.
*i say likely, because he is of questionable intelligence. and if wasn't smart enough to realize that drinking that much water at one time would kill you, we'd at least get to laugh as they hand out the next darwin award.
I'd suggest you do the same thing, but since you completely missed my "transparent" point it would be foolish on my part to do so.
Brian K.: It's entirely possible that I missed something in your post, I'll read them again tomorrow to see if I get an "aha" moment.
Like what? Moving to higher ground?
What will really reduce carbon consumption is population reduction. To decide who gets 'reduced', we need someone smarter and just better than the rest of us. I nominate Brian K, who apparently feels himself to be qualified and seems itching to take on the role.
I'm glad you were able to reach that conclusion. It stands in contrast to your previous comment.
"Grover, the 'least dire' predictions are that nothing is going to happen."
Sorry, I didn't mean to confuse you. I guess by "dire" I meant, like, "dire"--as opposed to, like, "nothing."
his argument that i was responding to was that since CO2 is good, more CO2 must by better. I did this by pointing out that even though water is good, more water will kill you. same thing goes for oxygen, sunlight, food, etc etc etc
Brian K: Thanks, I see I don't have to reread the posts after all.
That's equivalent to saying "This proposal makes me richer by turning lead into gold. Assuming that it actually does give me a way to turn lead into gold, I'm all for it."
Taxes like this will never be revenue-neutral. Even if the proponent is sincere about reducing some other tax to make up for adding this tax, reducing it will reduce the power of some bureaucrats or some publically funded group, and they'll never stand for it. The end result will be that the new tax sticks around, but the reduction in the other tax doesn't. It always works that way.
hmm...i seem to recall Bush saying he cut taxes a while ago. i also seem to recall all of conservatives commentators saying that those tax cuts helped our economy. I guess Bush et al lied to us because, according to you, tax cuts never happen.
I have some prime land in Florida for sale
so just because a tax cut can potentially be reversed it is not a tax cut? (the answer to this question is a resounding NO! did you or did you not pay less taxes in those years? paying less taxes = tax cut...it's not rocket science)
does this mean there is no such thing as a tax hike? they can always be reversed to. why are you picking on democrats for not doing anything? by your logic this whole debate is moot, there is no such thing as taxes...congress can always decide to stop collecting them.
A carbon tax is free money to politicos, who use it to expand the size of govmt, which means that the revenue must flow forever. Which perversely motivates the govmt to maximize carbon burning in order to maximize revenue collection. Remember cigarettes? The govmt found creative ways to continue their sale because they were addicted to the tax revenue.
A carbon tax is a ham-handed and grossly inefficient way of putting the pollution externality into the price of fuel. It's a pig, and no amount of lipstick and clothing will make it beautiful.
Remember the old saw about how if all you have is a hammer, everything looks like a nail? If you're a politico or other person dependent on government activity, every problem demands a new tax. That's blinkered thinking. It's amazing that otherwise smart people continue to do it: I guess because if they proposed a non-tax solution, it's a dead idea to politicos. And so an inefficient, crappy, Soviet central planning solution is better than none.
Fools (me) rush in. How about following this principle instead: keep the externality money out of the government's hands. Pass a law saying that fuel providers must contract with remediation providers. Don't specify the technology, just the remediation target. Set remediation targets based on technology capabilities. Let the fuel providers pick and choose remediators. As the remediation technologies improves, adjust the targets. Voila. Externality is now in the price of fuel, and we have created new technologies and industries that we can sell to the world.
And we've kept the money away from our politicos, who just would have pissed it away with nothing to show for it.
Or likewise, if you sell beef, you have to capture the bovine methane, since we all know CH4 is a more powerful greenhouse gas than CO2, right?
Over time, the connection will be eroded. And soon, a carbon tax will be like the current taxes we pay on fuel and telecommunications: free money that politicians don't have to justify taking from us. Whereas all the tax cut action will continue to be made in income tax rates. Up in one administration, down the next. And the carbon tax will go on forever inching upward.
And would the carbon tax be used for global warming remediation? Come on, these are pork barreling, earmarking, log-rolling politicians that we vote for because they bring home the bacon from Uncle Sugar for our little parochial interests. Remember all the money we flushed on SynFuels and Oil Shale in the 70's and 80's? A token effort that produced no lasting benefit, lingered on for years, until was finally killed out of mercy. It won't be different this time, either.
And I think we have our first example of why we’d never get a tax cut in exchange for a new carbon tax. Enough of the proponents of this tax think that this is something we should be paying anyway in addition to our current tax burden that they really won’t be motivated to keep any bargain that’s made. Sort of like the people who think that by taking less of your money through taxation the government is “giving” you something.
John A. Fleming:
1. Are there externalities that aren't reflected in normal free market pricing?
2. Might some be worth correcting for?
3. How, then?
bittern
If deus ex Mars comes down and hands out 250 million shiny pebbles in America, why does Thorley Winston think he deserves more than his 1/250M of the booty? Cuz he's feeling sore and put-upon? Cry me a river.
Notice that the Leftists now shoveling new ''carbon'' taxes are always promoting ever more unnecessary tax increases... but only on American workers; makes you wonder who's pulling their puppet strings. For example, China, which is currently building two (2) new coal-fired power plants every week, and which intends to continue building them at this rate until at least 2024, gets a totally free pass from the Leftists on Kyoto; and even more than a free pass on ''carbon credits'' [many $millions worth were given by the UN, free, to China, Russia and other heavily polluted countries -- they are certificates to pollute, which Al Gore's company is now selling to Americans -- with a large part of the profits going directly to China, one of the most polluted countries on Earth]. Only America -- the environmentally best regulated and cleanest country in the world -- gets continual venom from the anti-American Left.
There is no need to respond in detail to the few posters above who, as usual, have deliberately misrepresented what was said; previous posters have saved us some typing by decisively slapping down the Leftists for the strawman arguments that the Leftists set up themselves, then knocked down. Strawman killing heroes in their own minds that they surely are. As one puffed, ''While I am obviously qualified...'' Ri-i-i-i-ght.
In one instance upthread [2nd post], which caused apoplexy in the purveyors of the [insane] idea that 'carbon is ee-e-e-vil!!', the following simple question was asked:Incidentally, there is much more refereed data available online showing the same thing that the chart above shows. But this visual aid is interesting because it covers the entire CO2/temperature history of the planet. It provides ample visual evidence that there is no correlation between rising/falling CO2 levels, and rising/falling global temperatures [the light red line in the chart is temp; the light blue line indicates the carbon dioxide level in parts per million per volume: ppmv]. Check out the Jurassic, for example. As CO2 levels ramped up higher and higher over millions of years, the temperature plunged. Then, when CO2 decreased significantly -- the temperature of the Earth experienced a major increase. Same in the paleocene, the pliestocene [note that temperature dropped substantially while CO2 levels remained far above today's level]; and the entire paleozoic. If CO2 [''carbon''] is evil, then how is it that mammals emerged and thrived during a time when CO2 was several thousand ppmv above today's level?
The very best that the doomsters/tax suckers can accurately say is that we don't know nearly enough to make the radical Luddite-style changes that they demand. Their demonizing of ''carbon'' is simply a means to an end: forcing taxpayers to open their wallets much, much wider.
1. Of course, by definition. An externality is the incurred cost of using a product that is not reflected in the price, usually because the cost is diffusely spread downstream and not directly traceable to or borne by the user, etc.
2. Yes, but it depends on at least one of the following things: the ability to correlate the downstream costs with the usage/users of a product; the availability of a technology to reduce and/or remediate the downstream effects.
As to the determination of worth, there's at least a technical and a cultural determination. The technical is that the increased cost of the product must be proportional to the perceivable benefit; and cultural, that we agree to give up elsewhere to achieve this now-desirable benefit.
3. Two fundamental methods: capture at the source, or downstream. In the 1970's, we added pollution control to our automobiles. Air pollution went down; cost of autos went up while performance went down (70's cars sucked). Same for power plants: in the 70's, we added scrubbers by mandate. In Norway they have carbon sequestration trials: CO2 from a power plant is pumped underground: electricity costs more, yet achievable value from decreased climate change is uncertain.
Examples of downstream remediation (no technical/value judgement implied): fertilizing the sea with iron; high-altitude particles to block sunlight; plant more forests; bio-engineering bacteria to clean up ground/water pollution; creating wetlands to filter polluted water.
Somehow money has to be transferred from product users to remediators. Transferring the money through our dysfunctional government is a bad idea. Technically, because it disconnects the pricing signals between product and remediation. Politically, the government will steal most of the money for other things, while connecting the remediation levels to political calculation.
Downstream:
John A.: Sorry, I didn't mean to have you describe technologies. My question to you is very specific, and comes off your comments. JAF, HOW would you recommend "putting the pollution externality into the price of fuel"? (Who sticks it in?) (I'm off, will check back tomorrow!) (Your previous comment looks like it got cut off)
I apologize for any misunderstanding, but I was not referring to any of your posts, which I always enjoy reading. I do not approve of China's actions. As I said: China, which is currently building two (2) new coal-fired power plants every week, and which intends to continue building them at this rate until at least 2024, gets a totally free pass from the Leftists on Kyoto...
My point was that other countries, such as China, are always excused [given a free pass] by the very same people who blame this country at every opportunity for the world's ills.
But there is a certain threshold of car use that people will engage in. Carpooling and using public transportation don't work under our current system - people work unreliable hours, don't want to carpool with strangers, and a fair amount of our public transportation system is maxed out. In Massachusetts, you can't get a parking spot at a T station after 7 am. Many of the trains are standing-room only. Taxing fuel consumption won't change any of that.
"How far from work?" Isn't that usually a function of the quality of the local school systems, housing prices, and dual-income families? Furthermore, most people stay in their houses longer than they stay at their jobs; should people move every time they get a new job, albeit one in the same city?
Environmentalists seem enamoured of the idea that, if we were to all change our lifestyle, we wouldn't use any energy. There is a certain level of inelastic demand. A carbon tax would punish people who cannot change their lifestyle.
Fed tax rate 28%
State tx rate 9.4%
Sales tx rate 8.5%
Med ins. rate 11% tx equivalent
Soc. security 15%+ [worker's contribution + employer's on behalf of worker]
Property taxes, phone taxes, gas taxes, other payroll taxes etc., etc., etc.
So you see, we already pay way more than ''40-50%'' of our income using your definition of taxes. Where do we go for a refund for the overpayment?
The central problem is that politicians and the special interest groups that own them are in a never-ending race to see who can squeeze ever more money out of the already hard-bitten American taxpayer. They are exactly like a pack of ravenous wolves loose in the barnyard. Taxes are a one way street; a ratchet. Taxes almost never go down, and when they do the squealing from all the affected groups is deafening and never ending until the taxes get restored -- usually at even higher levels than previously.
So I got a question for all the libs out there who think that the government needs to get its hands ever deeper into the pockets of U.S. workers: Who represents the ordinary taxpayer?