PF – Feb ’16 – Carbon Tax

There is now a Carbon Tax folder, with articles pulled from several years of collecting information on the issue of global warming. There are more than I’m posting here.

Let’s open with Friedman, mainly because his first paragraph gives an excellent opening quote for a Pro speech:

Friedman – The Market and Mother Nature

Notice that the wording of the resolution says nothing about why we should adopt a carbon tax. Is it because of global warming and the dangers of that problem, so that carbon emissions are reduced? Is it to raise additional revenue for the government, and carbon emission reduction benefits are just incidental to that? (Note the Pigou/Pigovian taxes comment – something worth knowing.) Friedman again, plus Plumer with charts and numbers:

Friedman – Its Lose-Lose vs Win-Win-Win-Win-Win

Plumer – Seven thrilling facts about carbon taxes from the CBO

If the point is mitigating global warming problems, then Prasad says we should earmark the tax money for things related to that and not spend it on something else. (This article is from 2008; most subsequent articles haven’t made this point as well as she does.)

Prasad – On Carbon, Tax and Don’t Spend

The topic specifies the U.S. only, which leaves open the question of how effective such a tax would be globally. From July 2015, a graphic on what others are doing, comparatively:

CarbonTaxes-Global

A carbon tax is only one way of pricing carbon emissions; the major alternative is cap-and-trade. That involves the government setting overall emission levels and then selling permits to emit that amount of carbon. As the emission numbers ratchet down, the permit prices rise, thus making alternatives more economical. One argument for a carbon tax is that the conservative politicians in Congress who traditionally block any form of additional taxation would prefer it over additional government regulation (of emission levels). The following articles support this point; note that Mankiw was a George W. Bush advisor once upon a time.

Bouie – Why conservatives should want a carbon tax

Mankiw – A Carbon Tax That America Could Live With

Mankiw – The Key Role of Conservatives in Taxing Carbon

(If you’re Con, and want to run with cap-and-trade, there are some articles in the folder on the issue. Note the point that one option gives away some of the permits, which companies could then sell and reap a windfall; some of the articles argue that all permits should be sold if such a plan is to work.)

At what level should the tax be set? Samuelson’s article addresses how such numbers are derived, perhaps to the detriment of carbon tax proposals (too little accurate information).

Samuelson – Global warming pragmatism

A look at both forms of carbon pricing, with a glance northward (Canada’s experiments).

Proof That a Price on Carbon Works

Are there non-pricing alternatives? Sequestration anyone?

Turning Carbon Dioxide Into Rock, and Burying It – Iceland and CO2 sequestration

Flannery – A ‘Third Way’ to Fight Climate Change – CO2 sequestration

Other things to keep in mind: Dealing with global warming will require a global approach; can any U.S.-only actions be effective? Should tax revenue be earmarked for global warming mitigation only, or be used to reduce the deficit, reduce individual and corporate tax rates, or fund needed social programs? A carbon tax is a regressive form of taxation; is that an argument against it? Of the methods available, is a carbon tax the best option? (Will anything short of sequestration – pulling the excess CO2 out of the atmosphere – really deal with the problem?)

There is a Global Warming folder in the Extemp Files, for additional information on the larger issue. There are also some posts this fall (FX/NX) tagged Global Warming, which you can use the site’s search feature to find.

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