12.13.2007

A Pretty Easy Carbon Offset

I'll never be accused of being a tax-and-spender, but I have to tell
you that one area that I'm all about higher taxes is on carbon. Most
economists will tell you a carbon tax is a much preferred behavior
modifier and revenue raiser than the cap-and-trade approaches a lot of
policymakers are pushing for. Unfortunately, anything that's called a
tax is DOA nowadays.

Which is unfortunate, because a carbon tax is not at all a painful
tax. I just went to carbonfund.org to renew my carbon offset (six
months late, by the way; you may recall I wrote about this site last
June). I punched our family's utilities consumption, gas mileage, and
plane trips into their calculator, and it told me I could completely
offset my family's carbon consumption for less than $100.

There are a lot of ways taxes could get $100 from me. Let's assume we
avoid taxes on utilities, since a lot of people struggle to pay
utilities bills, and since it's such a life essential that any
behavior modification would be on the margins. Our family drives 8000
miles a year; so a one-cent vehicle mile tax would extract $80 from my
family. Tack on $5 per person for our annual flight to California,
and there's another $20. Voila - $100 in tax revenues from the Huang
family.

I haven't run the numbers for other car and plane amounts, but I have
to think it's all pretty painless to a family's bottom line. In other
words, if you implement tax increases on the orders of magnitude
described above, you completely offset everyone's carbon consumption.

Politicians, I know tax increases are unpalatable, but the ones
required to become carbon-neutral are really not that painful. What
is painful is the future we'd be leaving to our children and our
children's children if we didn't do anything about it.

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