A carbon tax is a good idea, but not as a replacement.


In an article titled The Most Sensible Tax of All, an argument is made to use a carbon tax insensibly- as a replacement for other taxes. In the very same article, the authors make this point:

Of course, carbon taxes also lower carbon emissions. Economic theory suggests that putting a price on pollution reduces emissions more affordably and more effectively than any other measure. This conclusion is supported by empirical evidence from previous market-based policies, like those in the 1990 amendments to the Clean Air Act that targeted sulfur dioxide emissions. British Columbia’s carbon tax is only four years old, but preliminary data show that greenhouse gas emissions are down 4.5 percent even as population and gross domestic product have been growing. Sales of motor gasoline have fallen by 2 percent since 2007, compared with a 5 percent increase for Canada as a whole.

If you have reduced your other taxes and are relying on the carbon tax, and then emissions go down… you are now raising less tax revenue than previously.

No, what you do in the situation we are in is this: pass a carbon tax. Use that money to go into renewable energy infrastructure and R & D, employing people on the way. Then when the carbon tax is no longer raising much revenue, we will be in a better position to not need it.

Found through Wonk Wire.


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