Carbon Tax Needed to Put Dent in Pollution

Words cannot describe what a great time I had on Election Day, watching liberal progressives beat Team Rape and the Adelson Gang in state after state. However, the election’s over, and it’s time to head back to reality. Now that Washington has held onto its progressive government, we the people need to show them we’re ready for a significant, intelligent and beneficial policy change. I’m talking about an emissions tax—and with a receptive legislature braced for action, there’s no better time.

I am a realist when it comes to human behavior. Habits are difficult things to change, especially when those habits are netting you billions annually. If policy limits energy and holdings companies to a certain emissions cap, that policy only incentivizes pollution right up against that cap—something the planet cannot afford. What we need is a law that will make polluters strive to pollute as little as possible, one that changes emissions from externalities to true costs.

That leaves us with two options. I don’t love either of them, but the time has come for those serious about environmentalism to get their hands dirty in less-than-perfect options. If economic habits are the root of the problem, we can’t keep proposing solutions that expect people to ignore them; one look at this year’s weather makes it clear we can’t afford to be picky.

Cap and trade is popular with politicians because it seems to make environmentalism and the market economy fully compatible. Unfortunately, they still aren’t. Once a wealthy corporation bought up a stack of carbon credits, it would not only be able to continue to vandalize the Earth, it could legitimize that vandalism by claiming to be playing by “green” rules.

The emissions tax is superior for several reasons, but first and foremost because it treats pollution as what it is: a vice. Pollute more, get punished; pollute less, earn a reprieve. As for specifics, the emissions tax currently proposed in several states is modeled on a successful tax instituted in British Columbia. The tax—a flat rate based on tons emitted—is paid by all polluters in B.C., and rolls up gradually to give businesses time to adjust.

The most important aspect of the tax is that it is revenue-neutral. This policy is a tax hike no matter how you look at it, but the hike is offset by cuts to other taxes. British Columbia, for example, cut its income tax rate to 10 percent, one of the lowest in the G8. It’s the tax-cut aspect that will win this proposal bipartisan support, since the emissions tax will cause gas prices to rise. Americans will look more favorably on that if their income tax drops in response.

I say “emissions tax” instead of the more common “carbon tax” because of natural gas: The alleged miracle fuel does indeed emit much less carbon when burned, but spits out enough methane to break even and more. A broad emissions tax would convince the American energy machine to use natural gas as a bridge to an alternative fuel infrastructure, not a crutch to extend a finite and dying fossil fuel supply.

The tax has bipartisan support from economists and has already worked wonders in B.C. Since the vast majority of small business aren’t significant polluters, the cut in the corporate income tax rate helped entrepreneurs more than they were hit by the emissions tax hike, and ended up coming out ahead.

We need to start curbing greenhouse gases right now, and it’s looking increasingly clear that economics is the only way to do it. We’ve got candidates in office now who will be responsive to an environmentalist agenda. Let’s put them to work.




Filed under: Opinion Opinion Highlight

Responses


Carbon tax update | Stand-Up Economist Dec 19, 2012 16:09 PM

[...] great article in the Whitman College newspaper by student Sam Chapman. And David Frum on CNN.com. And [...]


The Pioneer | Whitman news since 1896. » We Can No Longer Ignore Geoengineering Feb 28, 2013 16:17 PM

[...] is without consequences. Economics has taught me that people respond to incentives; as I’ve written previously, a limit on the amount a plant can pollute only convinces the plant’s managers to [...]


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