Carbon taxes: the levy (some) conservatives love
Conservatives may usually oppose tax increases, but it looks like some in Washington might go for a carbon tax
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Despite the political landmines, a carbon tax makes good economic sense. The argument is fairly simple: By polluting the atmosphere and contributing to climate change carbon emissions impose a cost on society. The users of fossil fuels pay nothing towards that cost, but a carbon tax would build some of those costs into the price of oil, gas, and coal. As a result, users would choose to pay the full price or change behavior. On June 1, AEI sponsored an interesting panel that described this quite well.Skip to next paragraph
Howard Gleckman is a resident fellow at The Urban-Brookings Tax Policy Center, the author of Caring for Our Parents, and former senior correspondent in the Washington bureau of Business Week. (http://taxvox.taxpolicycenter.org)
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Many supporters of a carbon tax would offset the added revenue by cutting other taxes. Rep. John Larson (D-CT), for instance, would reduce payroll taxes. AEI, however, would repeal energy credits for both fossil and alternative fuels and, at the same time, impose a new tax on carbon.
Btw, the carbon tax issue isn’t just heating up in the US. In the UK, Tory Prime Minister David Cameron favors such as tax, and in Australia, former conservative prime minister Malcolm Fraser has thrown his support behind a carbon tax proposed by the current liberal government. It may be more newsworthy, but less important, that actress Cate Blanchett also backs the levy.
Will Republicans suddenly embrace a carbon tax? That’s no more likely than Democrats calling for cuts in Medicare and Social Security. But eventually, Washington will come up with a serious, bipartisan deficit reduction plan that will include both major tax increases and spending reductions. When that day comes, don’t be too surprised if a carbon tax finds its way into the deal. After all, as University of Maryland environmental economist Roberton Williams reminds us, if we are going to raise taxes, we may as well address climate issues while we are at it.
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