Blowing Off Some Steam About a Lot of Hot Air
The title of this article says it all: "Revenue Increases Should Also Internalize Environmental Externalities." Whether to patch gaping budgets or embed big-government structures, taxes solely as "here's how we can get more money" is dangerous; instead, the tax code should do double duty to incentivize and penalize in ways that reverse distortions caused by various externalities that end users aren't currently fully paying for.
A straight carbon tax would have been a lot simpler than our current cap and trade plan. And, as noted in this article, paying polluters not to pollute amounts to a carbon "protection racket." Every third human on Earth lives in China or India. Both are rapidly industrializing, both are against any sort of effective cap, both will gladly accept payments from US companies to not pollute, and both will be more likely to cooperate if we talked with them about getting the price of carbon right through a straight tax rather than through convoluted cap and trade machinations.
But R's run from the word "tax." And D's like complicated policies that make it look like they're doing something really important. So never mind a simpler solution that will actually align our incentives with the behaviors we want to incentivize.
Comments
Btw, other times governments get involved, all they're doing is making up for when they caused the distortion in the first place. So if I am lobbying for a carbon tax to help price suburban sprawl more correctly, all I am asking for is for the government to compensate for its own policies which helped cause the sprawl in the first place (heavy federal subsidies for highway construction, cumbersome environmental regulations that make it prohibitively difficult to build on urban brownfields, the mortgage interest deduction, etc.).
Also, Obama promised not to raise taxes on anyone making under $250,000. I wander if he would consider a carbon tax breaking this promise, or if he could shift taxes from some other place to make it more revenue neutral.
I'm totally with you on the reasoning here.
This is what you want - incentivize work, disincentivize driving - but it also means you have just enough people who will lose who will raise a stink. And this administration appears to want to please everyone, instead of making the tough decisions that lead to people changing their behavior in ways that are more socially optimal than the status quo (i.e. driving costs more now = I will drive less).